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Estate Planning

Business Financial Planning
  • Irrevocable Life Insurance Trust (“ILIT”)
  • Second to Die Life Insuranc
  • Charitable Giving Strategie
  • Charitable Remainder Trust
  • Irrevocable Trust Planning
  • Revocable Trust Planning
  • Supplemental Needs Trust Plannin
  • Animal Companion (PET) Trust Planning
  • Long Term Care
  • Annuitie
Estate PIanning

Irrevocable Life Insurance Trust (“ILIT”)
Many people aren’t aware that all of the proceeds from life insurance policies that they own at death will be included their estate for estate tax purposes. This is because if the policy owner can withdraw the cash value and change the beneficiary, then the policy owner will be deemed to have incidents of ownership over the proceeds and the IRS and, if applicable, state taxing authorities, can then tax the proceeds at death. Thus, if you own a $2,000,000 term life insurance policy at the time of your death, then the insurance proceeds will already use up more than half of your $3,500,000 exemption from federal estate taxes. The result is even worse if your state collects estate taxes since most state estate tax exemptions remain at or below $1,000,000

How an Irrevocable Life Insurance Trust Works
One way to avoid the taxing of life insurance proceeds at death is to establish an Irrevocable Life Insurance Trust or ILIT for short. An JUT is a type of irrevocable trust that is specififically designed to hold and own life insurance policies. Once the JUT has been set up, you will transfer ownership of your life insurance policies to the Trustee of the JUT. While you can’t be a Trustee of the ILIT - otherwise you’ll be deemed to have incidents of ownership in the life

insurance - your spouse and/or children can be Trustees
Once you’ve transferred ownership of the life insurance to the Trustee of the JUT, you will have given up all of your incidents of ownership over the policies. Since you’ll no longer own the policies, the proceeds can’t be taxed in your estate when you die. Who Are the Beneficiaries of an ILIT

Once you’ve transferred ownership of the life insurance to the Trustee of the JUT, you will have given up all of your incidents of ownership over the policies. Since you’ll no longer own the policies, the proceeds can’t be taxed in your estate when you die. Who Are the Beneficiaries of an ILIT

The JUT will also be designated as the primary benefificiary of your life insurance policies. Thus, after you die, the insurance proceeds will be deposited into the ILIT and held in trust for the benefit of your spouse during his or her remaining lifetime, and then the balance will pass to your children or other beneficiaries. Aside from this, the JUT can provide your family with a quick source of cash to pay your estate tax bill while at the same time not increase your overall estate tax burden. Another benefifit of the IUIT is that since the insurance proceeds will be held in trust for the benefifit of your spouse instead of going directly to your spouse, the proceeds can’t be taxed in your spouse’s estate either. And you can also take the ILIT one step further and set it up as a Dynasty Trust or Generation Skipping Trust for the benefit of your children and future generations.

Second to Die Life Insurance

Second to Die Life Insurance, also known as Survivorship Life Insurance or Joint and Survivor Insurance is an estate planning solution and estate planning tool and are insurance policies that insure the lives of two people, typically a husband and a wife. The death benefit is not paid to the beneficiary until the death of the second insured. These survivorship life insurance policies are generally available as either whole or universal life policies, and second to die life insurance often provides more affordable life insurance than two separate policies.

The reason a survivorship life insurance policy doesn’t pay until the second person dies is that it is designed to pay or assist paying for estate taxes. Estate taxes can be delayed until both spouses die thus the design of these special insurance policies.

Benefits for the company and key employee

Under a Revocable Trust Planning scenario, the key document used to control the disposition of a person’s estate upon death is the Revocable Living Trust.

Generally, a Revocable Trust has been described in much greater detail elsewhere, but generally, the Trust is created for the purpose of avoiding probate upon death and therefore becomes effective during the lifetime of the Grantor of the Trust.

The goal behind the Trust is to transfer all of the assets to the Trust during the Grantor’s lifetime and then, upon his death, all of his assets are divided and distributed pursuant to the terms of the Trust agreement. Because all of the assets have been supposedly been placed in the Trust, no need exists at the time of death to go through the probate process.

However, it is important to understand that very few of these trusts are ever funded fully with all of the Grantor’s assets. Accordingly, it becomes necessary to probate the Grantor’s Will to dispose of the remaining assets that were not placed in the Trust. When this happens, the original purpose for creating the Trust - to avoid probate - was completely frustrated.

Life Insurance Analysis

Irrevocable Life Insurance Trust (“ILIT”)
Many people aren’t aware that all of the proceeds from life insurance policies that they own at death will be included their estate for estate tax purposes. This is because if the policy owner can withdraw the cash value and change the beneficiary, then the policy owner will be deemed to have incidents of ownership over the proceeds and the IRS and, if applicable, state taxing authorities, can then tax the proceeds at death.
Thus, if you own a $2,000,000 term life insurance policy at the time of your death, then the insurance proceeds will already use up more than half of your $3,500,000 exemption from federal estate taxes. The result is even worse if your state collects estate taxes since most state estate tax exemptions remain at or below $1,000,000. How an Irrevocable Life Insurance Trust Works

One way to avoid the taxing of life insurance proceeds at death is to establish an Irrevocable Life Insurance Trust or ILIT for short.
An JUT is a type of irrevocable trust that is specififically designed to hold and own life insurance policies. Once the JUT has been set up, you will transfer ownership of your life insurance policies to the Trustee of the JUT. While you can’t be a Trustee of the ILIT - otherwise you’ll be deemed to have incidents of ownership in the life insurance - your spouse and/or children can be Trustees.

Once you’ve transferred ownership of the life insurance to the Trustee of the JUT, you will have given up all of your incidents of ownership over the policies. Since you’ll no longer own the policies, the proceeds can’t be taxed in your estate when you die. Who Are the Beneficiaries of an ILIT?

The JUT will also be designated as the primary benefificiary of your life insurance policies. Thus, after you die, the insurance proceeds will be deposited into the ILIT and held in trust for the benefit of your spouse during his or her remaining lifetime, and then the balance will pass to your children or other beneficiaries. Aside from this, the JUT can provide your family with a quick source of cash to pay your estate tax bill while at the same time not increase your overall estate tax burden.

Long Term Care

Family Impact of Long-Term Care
In a time of unprecedented longevity due to better health awareness, safety technologies, advanced medical techniques and advances with prescription drugs, many of us are likely to live into our 80’s and 90’s. Therefore, given a long life we may become frail or sick and need care.
Informal care by your family will have a cost to their physical and emotional well-being. Providing care to chronically ill people can make healthy caregivers chronically ill. Most people are forced to enter a nursing home when their caregiver gets sick.
Reallocating your income stream for care has a cost to your family’s lifestyle and continuing financial obligations.
Invading your investment portfolio creates substantial tax consequences and threatens the viability of your surviving spouse and your children who may depend on it for their inheritance. A surviving spouse could face severe financial consequences if most of the retirement income and assets are used to fund long-term care.
Second marriage conflicts may occur because prenuptial agreements are invalid when there are not enough funds to pay for care. Your spouse may be forced to
use assets creating a host of issues for the children
Long-Term Care Insurance Protection
FINANCIAL PROTECTION
Long-Term Care Insurance allows you to use your retirement portfolio for the purpose it was intended:
to pay for your lifestyle during retirement not to pay for long term care. Long-Term Care Insurance protects your entire “nest egg”.
PORTFOLIO PROTECTION
Your portfolio is protected during working years by life and other forms of insurance... Asset & Income Portfolio Asset & Income Protection Portfolio
Car Auto Insurance
Home Homeowners Insurance
Family Life & Health Insurance
Wealth More Life Insurance
Salary Disability Insurance
RETIREMENT PORTFOLIO LONG TERM CARE INSURANCE
NOTHING ELSE WILL PAY FOR CUSTODIAL LONG-TERM CARE* EXCEPT
LONG-TERM CARE INSURANCE.
• Medicare only pays for skilled nursing care and hospital stayS
• Medicaid is medical insurance for means-tested individuals with strict requirements on assets and income.
Medicaid only pays for nursing home care. Medicaid pays little or nothing for home care, adult care or
assisted living, therefore limiting your independence.

PHYSICAL/EMOTIONAL PROTECTION

Long-Term Care Insurance provides you with professional health and personal care should you become unable to care for yourself. When you have LTC insurance, you have given your family the ability to guarantee your care. LTC insurance preserves your dignity during periods of compromised health. LTC insurance prevents
the need for your family to become dependent on your family for daily care.
long-term care includes helping with Activities of Daily Living (ADL) - Bathing, eating, dressing, toileting, continence and transferring. It also includes help with
cognitive impairments such as:
dementia, loss of memory, orientation or reasoning. Why Now? Buying LTC Insurance NOW Makes Economical Sense!

  • Age and health as factors:
    Qualifying for coverage and the premiums you pay are directly linked to age and health at the time you apply for coverage. Apply as early as possible so you avoid the risk you won’t qualify later if your heath changes or you have an unforeseen accident.
  • Cost of waiting to buy LTC insurance:
    The longer you wait, the bigger the disparity in the annual premium. As you get older the cost of waiting grows dramatically, despite the fact premiums will be paid for less years. The increased premium rate per year as a result of waiting will increase the total premiums paid during the lifetime of the policy. Breakeven point for LTC Insurance is exceptionally low: Most policies cover their total premium costs paid within 45-75 days of care - about 1 1/2 - 2 1/2 months once benefits start!
  • Secure Benefits:
    PBGC pays the worker’s pension up to guaranteed limits if the employer cannot afford to pay the benefits or goes out of business. In most cases, the PBGC guarantee covers all of the earned benefit. A worker can earn a reasonable retirement benefit under a defined benefit plan, even if the worker has not had an adequate retirement plan or was not covered by a retirement plan earlier in a career.
  • Tax credits and deductions
    There are significant state and federal tax credits and deductions available now to reduce your premium costs significantly.
    LTC insurance inflation protection leverages the buying power of your LTC benefit:
    Your LTC insurance total benefit is much more than most people will be able to save to cover long- term care expenses or invest for this purpose. Plan Design and Considerations
  • Cost of waiting to buy LTC insurance:
    1. Daily Benefit: dollar amount insurance company will pay per day when you need care ($100-$500); monthly option
    2. Benefit Period: how long will pay outs continue (2 years to lifetime)
    3. Elimination Period: waiting period before benefits begin (0 days - 180 days)
    4. Inflation Protection: To cover increasing health care costs, and protect buying power of the daily benefit (5% compound, simple, or 2x compound inflation)
    5. Benefit Payment: Reimbursement: pays based on actual expenses for long-term care up to the daily benefit

    Indemnity: pays the full daily benefit upon the showing of one compensateable event per day such as a home care visit or a visit to an adult day care Cash benefit: the policyholder receives the full daily benefit upon presenting to the carrier a plan of care; he is not required to receive actual care.
Annuities

An annuity is a contract between you and an insurance company, under which you make a lump-sum payment or series of payments. In return, the insurer agrees to make periodic payments to you beginning immediately or at some future date. Annuities typically offer tax-deferred growth of earnings and may include a death benefit that will pay your beneficiary a guaranteed minimum amount, such as your total purchase payments

There are generally two types of annuities - fifixed and variable. In a fifixed annuity, the insurance company guarantees that you will earn a minimum rate of interest during the time that your account is growing. The insurance company also guarantees that the periodic payments will be a guaranteed amount per dollar in your account. These periodic payments may last for a definite period, such as 20 years, or an indefinite period, such as your lifetime or the lifetime of you and your spouse.

In a variable annuity, by contrast, you can choose to invest your purchase payments from among a range of difffferent investment options, typically mutual funds. The rate of return on your purchase payments, and the amount of the periodic payments you will eventually receive, will vary depending on the performance of the investment options you have selected.

An equity-indexed annuity is a special type of annuity. During the accumulation period - when you make either a lump sum payment or a series of payments - the insurance company credits you with a return that is based on changes in an equity index, such as the S&P 500 Composite Stock Price Index. The insurance company typically guarantees a minimum return. Guaranteed minimum return rates vary. After the accumulation period, the insurance company will make periodic payments to you under the terms of your contract, unless you choose to receive your contract value in a lump sum.
Variable annuities are securities regulated by the SEC. Fixed annuities are not securities and are not regulated by the SEC. Equity-indexed annuities combine features of traditional insurance products (guaranteed minimum return) and traditional securities (return linked to equity markets). Depending on the mix of features, an equity- indexed annuity may or may not be a security. The typical equity-indexed annuity is not registered with the SEC.
You can learn more about variable annuities by reading our publication, Variable Annuities: What You Should Know. You can learn more about equity-indexed annuities by reading the online brochure, which explains equity-indexed annuities and provides resources for obtaining additional information at