Four Key Guides to End of Life Planning

Our Personal Gift to You and Your Loved Ones…

Please Take Advantage of Our:

4 FREE Guides to Creating a Smart End of Life Plan

(Note: You can download, print, or save each guide below at NO COST)

Please Watch This Brief Video Explaining Why You Should Create Your End of Life Plan:

1. “Completing Your Family Record Guide“:

• Benefits of keeping all of your financial affairs in one place

• A complete list of key matters to have readily available

• Who can access and how often to update this information

2. “Guide to Knowing Your 3 Best Options to Pre-Pay Funeral Expenses“:

• PreNeed Plan – How this plan works, who it fits, pros and cons

• Final Expense Plan – How this plan works, who it fits, pros and cons

• Cemetery Pre-Purchase Kit – Burial Versus Funeral Pre-Planning

3. “Guide to Choosing a Will Versus a Trust“:

• The importance of creating an estate plan and how to start

• Easy-to-understand difference between a Will versus Trust

• Helpful ways to determine which is one is best for you

4. “Guide to Creating a Love Drawer”:

• Benefits of keeping all of your financial affairs in one place

• A complete list of key matters to have readily available

• Who can access and how often to update this information

See Exactly What a “Love Drawer” is – and Why It is So Valuable For EVERY Family:

A Personal Story From the Founder:

I would like to share my personal story to explain why this is so important…

Since I have worked as a Financial Advisor for nearly 25 years, part of my job is helping protect families against unexpected events that can cause significant financial and/or emotional difficulties. Life most Financial Advisors, I typically accomplish this by using products and strategies such as Life Insurance, Wills, Trusts, Estate Planning, Disability Insurance, Long-Term Care/Home/Umbrella Insurance, and more.

To be honest, I considered myself to be well-versed in protecting my clients…and even my personal family. However, everything changed for me when I lost my mother on Thanksgiving Day of 2008.

Losing a close loved one is, by far, one the most difficult experiences anyone can face in their lifetime. I remember feeling so disappointed that, as a Financial Advisor, I was never educated or trained about how to handle this situation in any way. I was so surprised to face the fact that I was totally unprepared. And I also remember feeling so disappointed that I was unable to answer the 3 most common questions nearly every family asks:

1. What do we do now?

2. Who can we turn to for credible help, advice, and guidance?

3. How do we get started?

What is One of the Most Valuable Lesson I Learned?

Looking back on this extremely difficult process myself, I suddenly realized it didn’t have to be that way. Over the years, there were countless opportunities for me to find the time to have this discussion with my parents. Every day I regret the fact that I did not take the time to talk about planning and preparing for this, and encourage them to simply document their preferences for “what they would want“. Every day I see my mothers remains in a beautiful urn, and yet I regret not knowing whether she is in the “right place”.

I fully understand that nobody likes to talk about death or dying, but the harsh reality is that we will all die some day. So I cannot encourage anyone reading this enough…every son, daughter, spouse, grandchild, or loved…to have this discussion…sooner versus later…since you never know what the future holds in store for us.

You Will NOT Regret This!

You will experience two meaningful results from this selfless act of love:

1. You won’t regret it – You will sleep better at night, and your family and loved ones will be forever grateful. This is a win-win!

2. You will be remember in a better way – Knowing this would be a time of great loss, you took the time to do something very special. You sent an everlasting message that showed how much you cared by easing the burden of so many difficult emotional and financial decisions.

The REAL Reason End of Life Planning is the “Gift of a Lifetime”:

Going through something like this helps you realize that every day is a gift. I guess that is exactly why they call it “the present“. Use “your present” day and time to build a plan that allows your loved ones to celebrate your life and be thankful for all of the great memories and times they were able to share with you.

Again, congratulations for taking this all-important step for you, your family, and all of your loved ones!  Below is the link that takes you to each of these 4 FREE Guides:

Four Key Guides to Your End of Life Planning Gift For Your Loved Ones

Christopher P. Hill, Founder
FuneralResources.com

How to Prepay Your Funeral Expenses…
And Why?

According to AARP (www.aarp.org), the average cost of a funeral today is approximately $10,000.  So by preplanning a funeral and creating an end of life plan, your are certainly doing a wonderful thing by helping to alleviate many of the funeral planning challenges.

Therefore, over 60% of people who are willing to selflessly take the time to create an End of Life Plan will also choose to prepay their funeral expenses.  By taking care of your funeral costs and expenses in advance, this is yet another added value.  Prepaying your funeral costs is another way of leaving behind a memory of how much you cared for your family and loved ones, rather than leaving them to deal with these financial challenges.

While you need to learn and understand the three most common ways to preplan a funeral, you should also be familiar with the various ways of prepaying your funeral expenses, since this is  one of the fastest growing and widely-accepted aspects of the funeral planning process.

Similar to preplanning your funeral, most financial professionals agree that prepaying your funeral expenses should be a standard topic of discussion when creating a financial plan and estate plan.

The most common and widely used strategies to prepay your funeral expenses are savings, life insurance, and funeral insurance (also referred to as burial insurance), mainly because they tend to be deemed the most reliable and readily available. However, there are several other finance advice strategies to consider when prepaying your funeral costs or expenses:

Savings

Although many people choose to set aside savings to pay for their end of life plan and funeral expenses, there are several reasons this does not always end up working out as originally planned. First, the savings can be depleted based on unexpected financial circumstances, such as health or financial issues. Second, these funds are not always readily available and liquid upon death due to the challenges and restrictions often found in estate planning. Third, the funds set aside can often be insufficient due to inflation and the rising cost of funeral expenses. Finally, it should be noted that savings are included in a part of one’s estate, and, thus, the taxable consequences can often come into play.

Life Insurance

Term Life Insurance is widely considered to be a flexible, simple, and affordable way to pay for your final funeral expenses. Although Term Life Insurance has a set term, or set number of years, it also has multiple uses in prepaying for your funeral. Because upon your death it becomes a liquid asset that is usually not part of your estate, it can be used for many things such as your funeral or memorial services, burial expenses, cremation, liquidity, and many other things, including debts or obligations.

In addition, there are some types of life insurance that allow the funds contributed to these policies (either in lump sum, monthly, quarterly, semi-annually, or annually) to grow and accumulate as a cash value that can be accessed if necessary. Therefore, these policies can not only be used for funeral expenses, but also for other financial planning options that may arise such as financial emergencies, and college.

Funeral Insurance

Funeral insurance is an insurance policy which is specifically designed to cover any costs or expenses which are directly related to your funeral. If you purchase one of these policies, one of the options you have is to determine exactly which funeral costs or expenses are to be covered, such as funeral flowers, burial plot, grave marker, and much more. Another option you have is for the policy to be paid out in a single lump-sum, which can be used to cover your pre-determined costs or expenses, or simply help your loved ones financially as they plan for you. There are many insurance companies that offer funeral planning packages, and certain funeral homes or funeral companies also offer funeral insurance policies.

PreNeed Trust Agreements

Another alternative to prepaying your funeral is to consider a PreNeed Trust Agreement to pay for your costs or expenses. Generally speaking, these Trust accounts are typically funded with monthly payments that are invested in a fund which is designed to grow over time. Although a Trust account is designed to provide the potential for protection against inflation, it is not guaranteed to do so.

Get Help

Although the large majority of the funeral industry will tell you that most funeral costs can range anywhere from $5,000 – $10,000, it is very common for funerals to cost much more or maybe even less.

Also, as with any important financial decision or investment, there are many advantages and disadvantages to each of the options mentioned above. Before choosing a policy, it is important to consider many things, including but not limited to your age, health, financial status, objectives, liquid assets, tax issues, estate tax issues, family needs, etc.

In summary, although nobody likes to think or talk about dying, it is one of the facts of life we all must eventually face. If you are trying to build a successful financial plan, the only way you can be sure your plan works smoothly and efficiently is to be proactive about your planning process. This is particularly true and necessary when creating a proper plan of succession, and everyone should consider including an end-of-life plan.

Please consult with your attorney or financial advisor before applying or purchasing any of these policies, pay close attention to your specific state requirements, and also the financial strength and claims paying abilities of each company, funeral home, etc.

Who REALLY Needs an End of Life Plan?  And Why?

See Exactly Why This Makes Perfect Sense…From the Heart

The sad truth is that the financial planning industry largely overlooks the fact that creating an End of Life Plan needs to be a part of a sound comprehensive financial plan.  To prove my point, as a Financial Advisor for nearly 25 years, I have never been trained or educated on how to help my clients prepare their end of life plans and preferences.  Furthermore, I have also never been trained or educated on how to help my clients deal with the funeral planning process after a loved one has passed.

See For Yourself Why This Only Makes Sense:

The Missing Piece of Financial Planning – Your End of Life Plan!

The reality is that a client should logically turn to their Financial Advisor for anything that has to do with not only their money, but also  the best interests of their family.  This involves a detailed review and analysis of things like insurance, investments, estate planning details (How to Choose Wills or Living Trusts), minimizing or eliminating taxes, college planning, mortgages, and so on.

The key point here is that as Financial Advisors, arguably the most important role we play is helping protect families against unexpected events that can cause major financial or emotional challenges…and possibly irreparable damages or losses.

Most Financial Advisors typically protect their clients by implementing traditional financial products and strategies such as life insurance or creating Wills or Living Trusts with Estate Attorneys.  They also recommend and promote important insurance policies which are designed to protect against specific losses, such as disability insurance, long-term care insurance, annuities, car and home insurance, and many other options.  These recommendations can vary, since  of course, each family’s situation is usually unique and different.

To be honest, I considered myself to be extremely well-versed in how to protect my clients, as well as my own family, against unexpected events.  However, everything changed on Thanksgiving Day of 2008 when I lost a close loved one and had to go through this experience personally.

Very Few Families Know “What to Do Next”

Losing a close loved one is, by far, one the most difficult experiences anyone can face in their lifetime.  I remember feeling so disappointed as we went through this experience…thinking that since I was a Financial Advisor, I should know better.  However, the enormity of the situation really hit me when I realized that I was never trained or educated on how to plan and prepare my clients for this particular situation.  I am almost ashamed to admit, I was totally unprepared.

I can remember looking at my family, and without saying a single word, you could tell we all had the exact same questions.  And sadly, these are the questions that most families are forced to deal with every day when they lose a loved one…such as:

1.  What do we do now?

2.  Who can we turn to for credible help and advice?

3.  How do we get started?

See What a “Love Drawer” Is – and Why Every Family NEEDS One:

Looking Back…What Could I Have Done Differently?

As I look back, I remember how comforting and gratifying it was to see our family come together and accomplish so many things in such a short period of time.  At the same time, I also remember feeling frustrated because not only did we lack the knowledge to deal with many of these challenges, but we also had not idea where to turn to for the help and answers we needed.

After experiencing all of the emotional ups and downs, the funeral planning challenges, planning all of the memorial service details, and even working out things like;  how to write a eulogy, choosing funeral flowers versus donations, and choosing among the many cremation urn, I can honestly tell you that planning a funeral can become overwhelming.

May I Offer Some Valuable Advice?

So after all of this, here is what I think so many people need to hear.  Consider these facts:

1.  There is nothing more difficult than the loss of a loved one
2.  Planning a funeral and memorial service is an almost overwhelming process
3.  The large majority of families are uneducated on the many details involved in this process
4.  VERY few families are left with any end of life plans – telling them  “what to do next”

The truth is it really doesn’t have to be this way. Yes, we are talking about death and dying.  No, it is not fun, and not something we like to even think about.  However, the harsh reality is that some day you will die.  So when you break it down to these simple facts, you are left with two choices:

1.   Do nothing – and let your family add insult to injury
2.   Plan in advance – and minimize or eliminate some of the burden you will leave behind

We are All in the Same Boat

If you think about it, there has been countless opportunities over the years for me to find the time to have this discussion with my clients, my personal family, and immediate family, my friends, and so many others.

I can honestly tell you that every day I regret the fact that I did not know how to talk about these all-important issues, nor did I know how to properly plan and prepare, in advance, for something that is this meaningful.

At the very least, I should have encouraged my entire family to make sure they document the most important final plans and preferences for ”what the would want“. To accomplish this, all you need to do is take the time to complete a Family Record Guide.

Every day I look at a beautiful urn in my office.  This urn reminds me of one of the most amazing people I will ever know and love, and I cannot help but wonder;  “Is she in the right place? I will never know “the right place”, but I do know that it did not have to be this way.

What is the Key Message Here?

Again, please understand that I know nobody likes to talk about death, dying, or end of life planning.  However, we have to face and accept the fact that not are we going to die some day, but it could happen much sooner than anyone ever expected.

So my sincere hope is that I can encourage anyone who is reading this…every son, daughter, spouse, grandchild, or loved one…to have this discussion with your family. And since nobody knows what the future might bring, have this talk sooner versus later.

Please Always Remember This

There is no such thing as preparing your End of Life Plan too soon.  On the contrary, the worst thing you can do is take the attitude of “I don’t need to do this now…that won’t happen to me“, or, “I can can do this later“. As the old adage goes;

“By Failing to Plan…You are Planning to Fail.”

You Can’t Go Wrong:

By creating an end of life plan in advance, here are a few of the meaningful benefits you will experience from this selfless act of love:

1.  Peace of mind – You will sleep better at night knowing that you have completed this all-important plan, and that your family and loved ones will be forever grateful.  This is the true definition of a win-win situation.

2.  You control how you will be remembered - Knowing this will be a time of great loss for your loved ones, you will be remembered for showing how much you cared by sacrificing the time to do something very special…easing the burden when it is needed the most.

After going through something like this helps you realize that every day is truly a gift.  I guess that is exactly why they call it ”the present“.  So please, take advantage of “the present” you are given today and build a plan that allows your loved ones to celebrate your life, and focus on how grateful they are today…and will be after you are gone…for all of the great memories they were able to share with you.

GET STARTED TODAY – Your First Easy Step:

I would like to personally congratulate you, in advance, for taking the first step towards creating a smart End of Life plan for you, your family, and all of your loved ones!

The first step to getting started is clicking on this link below to access our:

Four Key End of Life Planning Guides

(Note: There’s NO COST to download, save, or print these four guides)

Christopher P. Hill, Founder
FuneralResources.com

Estate Planning Often Fails to Protect Your Family

Creating a Will or Trust Does Not Solve Many Key Problems

What is Estate Planning?

Insurance companies, banks, financial advisors, and many attorneys all advertise that they will help you with your estate plan. However, when financial advisors talk about estate planning, unless you are using the proper disclosures, many people can be confused as whether you are providing financial and/or legal advice.

The Answer

An effective estate plan is one that protects and provides, for you and your loved ones, now and in the future.  Then, this plan distributes your property the way you want, when you want, and how you want, while paying the minimum of taxes and expenses and causing the smallest possibility of a family feud. The reality is the only way this effective plan can happen is when two things occur:

1.  You take advantage of utilizing the skills of lawyers, accountants, financial planners, insurance professionals and/or trust officers.
2.  Each of these financial professionals involved work together to coordinate and integrate this estate plan so that it works in harmony with the rest of this client’s comprehensive financial plan.

Example: Sam and Sally

Sam and Sally meet with a seasoned estate planning attorney to develop an estate plan. During the interview the estate planning attorney discovers that Sam has several old life insurance policies which would provide $300,000 to Sally if Sam died, and the total cash value of the policies are $280,000.  The cash value is what the insurance company would pay Sam today if Sam turned in (surrendered) the insurance policies while Sam is still alive.

Like many seniors and baby boomers, Sam draws income from a pension plan which has a 50% Survivor Benefit.  Therefore, after Sam dies, Sally will receive only half of his pension income, which creates a significant decrease in not only Sally’s income and standard of living, but also her ability to maintain the payments and upkeep of their house.

Like most seniors and baby boomers (and homeowners for the most part), Sally’s home is her pride and joy.  She has spent thousands of hours on activities and improvements such as landscaping, building beautiful flower beds, decorating her kitchen, adding a wonderful deck and patio, and so on.  Sally enjoyed making her home a very pleasing and comfortable place, and this special home is filled with many wonderful memories of family gatherings.

What is the Central Problem?

As mentioned earlier, the lawyers can create the Wills, Trusts, Powers of Attorney and property transfers to make their estate plan perform as they believe to be effective.  But, the reality in most cases is that these documents do not save Sally’s house. The central problem in Sam and Sally’s estate is not the legal documents.

Their original intention was to prepare the proper legal documents and estate plan that would ensure their property goes to whom they want, when they want, and how they want, with the minimum of taxes and expenses.  However, in this case, this does not accomplish some of key goals which have been overlooked or ignored.

The problem here is that Sally, who statistically is likely to survive Sam, will not receive enough life insurance proceeds to replace the income she needs in order to stay in her beloved home after Sam dies.  As with most cases, the children of Sam and Sally have their own families, are well established and don’t need (or are not depending on) Sam and Sally’s money to live on.  And now at Sally age and place in life, the so-called “golden years”, she does not have the stamina, skills, or desire to go back into the workplace.

Providing For the Surviving Spouse

In this case, the proper solution to this central problem would have been for Sam, or a qualified financial advisor, to identify this potential problem, and exchange his insurance policies for a new insurance policy that will provide enough money for Sally to live on after Sam dies.

Not only is this something financial advisors are trained to protect retirees agains, but they are also likely to know that the tax code under Section 1035 allows Sam to exchange his old policies for a new policy with a higher death benefit and lower cash value.  The best part is this life insurance policy can exchange without paying any taxes at the time of the exchange, even though Sam is using his untaxed earnings (capital gains, dividends, interest, etc.) in his insurance policy to buy something of greater value to him.

The Main Purpose of Life Insurance

There are many reasons people or families choose to buy permanent life insurance, since it can serve many purposes.  For example, some purchase these policies as an investment due to the upside growth potential of the cash value.  Others purchase these permanent policies as a tax-saving or tax-deferral vehicle, since the cash value grows without being tax, and if managed properly, can be withdrawn without paying taxes or penalties.  One other common use of permanent insurance is to replace the income or estate taxes which could be due at the death of the surviving spouse.

However, the basic definition of insurance is the transfer of risk. Therefore, the most common reason people own life insurance is to replace the income lost in the event a spouse were to unexpected die, transferring the risk of a premature death to the insurance company. In this case, with $280,000 of cash value and a death benefit of $300,000, Sam has nearly all of the risk of his death on his shoulders and his insurance is providing him virtually no leverage.

This is the type of information that should be discovered by a financial advisor or insurance agent in the initial stages of the planning process, or discovered and brought to Sam and Sally’s attention during a review of their estate plan.  By simply asking questions regarding the amount of income Sally will have to live on should Sam die, how much life insurance Sam has, what kind of life insurance Sam owns, and what  the cash value amount is, this potential problem could have been easily avoided.

Solving the Central Problem.

The best possible solution is for Sam and Sally to have a qualified estate planning attorney and trustworthy financial and/or insurance professional working together. The insurance professional’s role would be to “shop around” and locate an insurance company that would be willing to offer Sam the best and most appropriate policy, with the goal being the largest death benefit and the longest duration.  Sam and Sally would then pay for this life insurance policy by using the cash value from Sam’s existing insurance policies.

The Features and Benefits

This aforementioned life insurance policy exchange, known as a 1035 exchange, does not require Sam and Sally to write a check, there are no tax consequences when they “trade the cash value” for this new policy, and they will not be required to pay any future insurance payments because they used the entire cash value to pay for this new policy in a lump-sum.

So if Sam owns a permanent policy, this is better in every way.  If Sam owns a policy where the life insurance protection only lasts for a certain number of years (commonly referred to as either Term Insurance or Universal Life Insurance), Sally will likely receive a much high amount of life insurance proceeds, and when combine with some of their other assets and income sources, this will likely be enough for Sally to stay in her beloved home.

Of course, Sam had the alternative of taking the $280,000 out of the policy and investing it in hopes that he could grow this $280,000 to a much higher amount, there are two major problems with this strategy.  First, there is risk.  For example, in 1966, the DJIA reached 1000 for the first time.  However, approximately 8 years later the DJIA plummeted to 570 at the Watergate Bottom, losing nearly 50% of its value during this 8-year period.  Another example is back in 1999 when the Nasdaq surged to approximately 5000.  However, 10 years later, the Nasdaq was below 1000, losing 80% of its value over this 10-year period.  The second problem is, even in a rising stock market trend such as 1990 to 1999, there are no guarantees Sam will live to a certain age.  Remember, the main goal of using this strategy is to transfer Sally’s risks to an insurance company.

How Can this Fail?

This happens very frequently because Sam’s prior insurance agent failed to discuss the possibility of this future problem with Sam and Sally. However, if Sam had consulted with a qualified insurance agent or financial advisor, he or she would have likely recognized this problem and either suggested a solution or recommended that Sam and Sally perform annual reviews to monitor this problem in the years ahead.  This happens far too often in the financial professional industry, and the most common reasons are:

1.  Some financial professionals tend to focus solely on products or strategies where they are compensated
2.  Others fail to recognize the importance and necessity to coordinate with the other key financial professionals who are directly or indirectly involved
3.  Some financial professionals simply fail to lack the training and expertise to understand these issues and options.

Key to Creating an Effective Estate Plan

Arguably the key ingredient in creating an effective estate plan is working together with a team of financial professionals who are looking out for the clients best interest from a “big picture standpoint”.  By working with a team that includes key financial professionals like a CPA, estate planning attorney, insurance professional, financial advisor, or personal banker, each of them can make an important contribution in helping to protect and preserve an sound estate plan.

Questions or Concerns?

Please contact our Estate Planning Expert Roger McClure at (571)-633-0330 or www.wealthcounsellors.com

Hello friends,

As many of you know, I am an writer/editor for several financial planning magazines and websites. If you would like to follow some of my column and articles, just click here:

Retirement and End of Life Planning Specialist

Also, below is a link to a page that talks about the “Top 10 Reasons” for people to consider preplanning.

I truly believe you will find this article to be extremely helpful and educational, particularly because I shared some details about my personal story…and how it relates to the importance of End of Life Planning.

The article also explains why I have such a deep passion and mission to encourage EVERY family, Financial Advisor, Estate Attorney, CPA, Insurance Agent, and Funeral Director to discuss the need to create an End of Life Plan, and why this NEEDS to be a part of their overall financial and estate planning process.

Top Ten Reasons and Benefits For Creating an End of Life Plan

Hope this helps!!
Chris

Estate Planning, Wills, and Trusts

ATTENTION MARRIED MEN:
Don’t Make the Mistake of Making a Will!

If you are a married man, making a Will can be a dangerous illusion.  The reality is there are no problems are solved without changing names on your accounts and house.

The Will Illusion:

We have all heard the TV and radio ads that you need to make a will and should hire a computer, not an expensive lawyer, to make the will. I have advised married men that only making a will is just an illusion that lulls them into a dangerous complacency. It is worse when the husband wants to make a will without his wife’s participation.

Why Do a Will?

Most married men who sign a will want to accomplish the following objectives: Make sure their property goes to their spouse and children; designate who will be the guardian of their children; make sure things go smoothly when they die; and protect the inheritance of their children. For the typical married man, none of these objectives are likely to be accomplished.

Ensure Property Goes to Spouse:

Seventy percent of married men own their house, bank and brokerage accounts and household goods jointly with their wives. The number is higher for first time married men. These men also usually designate their wives as the sole beneficiary of their retirement accounts and life insurance policies. They then sign a will, thinking they have protected their wives and children. Most men die before their wives. When the man dies, survived by the wife, everything goes to their wives due to the fact that all of their property is owned jointly with their wives and the will has no effect on the beneficiary designations on their insurance or retirement accounts. There is no protection of his wife of against her creditors or her disability and estate taxes will be higher. This is because the title to property overrides any provision of the will. If the man named his parents as the beneficiaries on his insurance or retirement accounts and did not change the beneficiary designations when he got married, then these accounts go to his parents if they survive him or to a probate estate if they do not, and not directly to his wife. Beneficiary designations override the provisions of a will.

Protect His Children:

Often, the married men I advise want to make sure that after taking care of their wives, their property goes to their children, and they want their will to say that. But, if the wife survives the husband, everything goes directly to her either by title or because the will says so. If the wife remarries, there is no protection for his children and all of man’s share of the property will go to the next husband and his children if the next husband survives his wife or one half to the next husband if there is a divorce. I have talked to many children who were unintentionally disinherited this way.

Guardians for His Children:

Husband dies first, survived by wife. Wife is now the guardian of the children and wife now decides who will be the guardian of his children if she then dies. The husband’s will is irrelevant at this point. Also, if the children are minors or disabled and if the wife does not have a will, in most states, the court will appoint the guardian and supervise the finances of the children until they are 18, depending upon the legal age for children in their state.

Things Go Smoothly:

Many people I have advised think that a will avoids probate. Not so; the will’s purpose is to direct the probate process. Instead, any property passing under a will must be probated. Probate is the state law process requiring that the will and a detailed list of assets are filed on the public record. Someday soon, your neighbor may be able to go online and see to whom you left your property. There are notice and accounting requirements, which vary from state to state and in some states are quite onerous and expensive to comply with. Probating a will is like filing a lawsuit against yourself, with a notice for everyone who has a claim to join in the lawsuit without the need to hire an attorney or file their own case.

Solutions That Do NOT Work:

The solution is not to make sure the wife dies first. Even if husband and wife make identical wills, and the husband dies first, none of the above is really changed much because the wife has a will. Non married couples come out ahead if they do not own their property jointly because the non married man’s will determines who inherits his separately owned property. Some married couples go so far as to get rid of jointly owned property, thereby requiring a probate when the husband dies and then again when the wife dies. This makes the probate lawyers a lot of fees.

Solutions that Work:

To accomplish the goals of the married man, he needs to set up a living trust and put the name of the trust on his accounts and real estate and name his trust as the death beneficiary of his insurance and retirement accounts. To have an estate plan which accomplishes your goals, I strongly suggest you sit down with a seasoned Estate Planning Attorney. If you need help finding one, we can help direct you on some great places to start.  You can speak with our Estate Planning Attorney Specialist, Roger McClure, at (571) 633-0330, roger@wealthcounsellors.com, or www.wealthcounsellors.com.

Estate Planning

Sometimes NOT Having A Tax Can Actually Create A Problem for Taxpayers:

Insurance Trusts and Generation Skipping Taxes in 2010

No Generation Skipping Taxes.

Since January and through the end of December of 2010, there is no Generation Skipping Transfer (GST) Tax, unless Congress changes the law in the meantime. The GST tax was part of the temporary repeal for one year of the estate tax, which automatically expires at the end of 2010. Starting January 1, 2011, the estate tax and the GST tax come back in full fury with up to a 55% rate of tax. Your estate can suffer both an estate tax and a GST tax at 55% each.

Insurance Trusts.

Trusts which own life insurance are one of the most efficient ways to avoid estate and GST taxes. Over the lifetime of the life insurance policy, the taxpayer may pay $300,000 in premiums, but the taxpayer’s heirs receive $1,000,000 of the death benefit of the life insurance tax free if the insurance is owned by an Irrevocable Life Insurance Trust. If the taxpayer still owns or controls the life insurance (not owned by an independent trust), then the taxpayer may have to pay estate and GST taxes at rates up to 55% on the $1,000,000 in 2011 and thereafter. People are often confused by this because there is no capital gain tax on the difference between the $300,000 paid for the policy and the $1,000,000 death benefit to the heirs. But, there is an estate tax on life insurance proceeds you own which is not in a trust even though there is no capital gains tax on the “profit”.

Creating the Insurance Trust.

Fred creates a life insurance trust, transfers the initial premium payments to the trustee of the trust (his CPA) and the CPA as trustee purchases the life insurance policy on behalf of the trust. The result is that when Fred dies, the $1,000,000 death benefit is available to Fred’s heirs with no estate taxes. If the life insurance trust creates lifetime trusts for Fred’s two children, Ellen and Paul, then Ellen and Paul split the $1,000,000 in their lifetime trusts and Ellen and Paul pay no estate taxes in their estates on the life insurance proceeds. Fred loves his grandchildren and sets up this life insurance trust to say that when Ellen and Paul die, then the grandchildren can also receive the remaining money in the insurance trust without any estate taxes. This can go on for generations and create a “Dynasty Trust”.

Annual Gifts of Premiums.

Each year Fred sends the annual premium of $20,000 to Fred’s CPA and the CPA pays the $20,000 for the annual premium payments for the insurance owned by the trust. Each year, the CPA sends a notice to Ellen of her right to take out $10,000 each year for 30 days and sends the same notice to Paul for his $10,000. Each year, Ellen and Paul do not ask for their respective $10,000. As a result, if proper procedures are followed, the $20,000 paid each year is exempt from gift taxes (which could be due from Fred) and if Fred’s total gifts per year are less than the annual exemption per person, $13,000 this year, then there is no gift tax paid on the $20,000 and no decrease in the $1,000,000 gift tax exemption of Fred.

Generation Skipping Trust Gifts.

If Ellen has the ability to unilaterally decide when she dies who gets her accumulated annual $10,000 gifts to the insurance trust, then all of the $10,000 gifts are part of her taxable estate as well as her $500,000, her 50% share of the $1,000,000 life insurance death benefit. We want the benefit of excluding this $500,000 from the estate of Fred and also from the estate of Ellen. So, we do not give Ellen the right unilaterally to decide who may get her accumulated $10,000 annual premium payments. When we do this, two things occur: (1) It is not part of Ellen’s taxable estate and (2) the $10,000 annual gift for the benefit of Ellen to the insurance trust does not qualify as a gift exempt from GST taxes. Unless we do something, the $1,000,000 death benefit could be subject to the 55% GST tax. What normally is done is that the CPA files a gift tax return each year using $20,000 of Fred’s exemption from the GST tax. This is a highly leveraged beneficial use of the GST tax exemption. Many insurance trusts are set up this way.

No Tax, No Exemption.

In 2010, there is no GST tax and therefore no exemption from GST tax. In 2010, the CPA can not file a paper with the IRS claiming a $20,000 exemption from GST tax. Does this mean that part or all of the death benefits are in the taxable estate of Ellen or Paul or is subject to GST tax in the estate of Fred? For all of those who have such insurance trusts, it is necessary that you take action quickly to solve this problem.

Loan the Premium.

The solution that many advisors are recommending is that instead of gifting the $20,000 in 2010, Fred should loan the $20,000 to the CPA in 2010 to avoid this problem. The insurance trust, not the CPA, is the borrower. In future years, the loan can be paid back to Fred either from additional gifts by Fred to the trust or a loan from the insurance policy.

Action Necessary if You Have an Insurance Trust.

If you have an insurance trust, be sure to analyze whether your trust has this problem in 2010.  If so, we strongly suggest you seek the help of a seasoned Estate Planning Attorney as soon as possible.  The Estate Planning Attorney Preferred Provider we recommend is Roger McClure, President of Washington Wealth Counsellors.  He can be reached at roger@wealthcounsellors, or (571) 633-0330.

eBook Library

A Gift of Love – Create a Love Drawer

Many financial professionals believe that life insurance should be referred to as “love insurance”. As cliché as this may sound, it certainly has a tremendous amount of merit. What better gift is there to give your family and loved ones upon your death than a large sum of money to be used for such things as income replacement, college tuition, retirement, taxes or estate taxes, charitable gifts, and much more? And if you really think about it, the last thing you would want to add to your family at the time of their emotional loss and grieving is financial pressure.

Watch this brief 2-minute video on what a “love drawer” is…and why it is so important:

Most of us would agree, including financial professionals, that life insurance plays an large role in creating a sound comprehensive financial plan. So in keeping with this theme of love, here is an even better idea. How about also adding another layer of love…a love drawer.

What Exactly Is a “Love Drawer”?

Simply put, a love drawer is a place where the person (or people) you choose can turn to, should you pass unexpectedly, to find all of your important information. This includes complete and instructions for all of the aspects of your life including things like your last wishes, financial affairs, special instructions, personal messages, and even your end-of-life plans and preferences.

What Key Information Should be Kept in This “Love Drawer”?

Below you will find a list of most (but certainly not all) of your personal and money matters that should be needed and addressed:

1. The firm name, address, and phone number of your Estate Planning Attorney
2. Your actual Will or Trust
3.  Insurance Information
4.  IRA’s and Life Insurance Information
5.  Investment Information
6.  Employer Information
7.  Social Security Statements
8.  Debts and Corresponding Contact Information
9.  Deeds or Titles
10.  Burial Wishes
11.  Love Notes
12. Any Other Important Documents

A Few Other Ideas – Our recommendation is that you tell at least three people who you love and trust where they can find this love drawer. These people can be anyone such as your spouse, parent, child, friend, or even your financial advisor or attorney. In addition, even though it may seem obvious, I would ask them to please respect your privacy and never open this drawer until it is absolutely necessary. These entrusted loved ones will be the ones who help ensure that someone will be there to step up promptly and act upon the details and instructions you have carefully assembled in your love drawer.

We encourage you to update this love drawer at least every two years. One of the few things we can guarantee in life is that things will change. Given the fact that we have many things in our lives that are constantly changing like taxes, estate taxes, family, age, health, wealth, our final wishes, etc., we should regularly review and revise this love drawer. These updates help to reflect any financial or personal matters that should be added, revised, or removed.

Receive our Free eBook – How to Create a Love Drawer

Funeral Costs

Top 10 Reasons to Pre-Arrange Your Final Expenses

When You Die, Show Your Family How Much You Love Them

by Minimizing Their Emotional and Financial Pressures

When you die, it should be obvious that your family and loved ones will be emotionally devastated as they try to cope with this grief and loss, but adding the stress of funeral costs and funeral plans is a burden you can help relieve.  So knowing these facts, one of the greatest gifts of love is to minimize (or preferably eliminate) as much of the emotional and financial pressures as possible.

The sad reality is that more than 70% of those who die today fail to leave behind as much as a Will for their family and loved ones.  As unacceptable as that may sound, it gets even worse.  More than 85% of those who die today leave their family with no knowledge of their end-of-life plans, preferences, or expenses.

Top 10 Reasons to Preplan Your Funeral

1.  Upon your passing, most people don’t have any idea how to get started, what they should know, or who they can turn to. Preplanning your funeral or burial arrangements can significantly minimize the stress and pressure that can accompany such a difficult time of grief and loss.

2.  This advanced planning offers you the opportunity to decide and control just about every detail of your memorial service and how you will be remembered.

3.  By documenting your last wishes, you can ensure that you and your remains are handled, cared for, and placed somewhere that fits you and your preference.

4.  By creating a plan for your final affairs, this can also minimize or eliminate any uncertainties or disputes among your family members. For example, one of the small details that can actually cause serious family disagreements are special family heirlooms.

5.  Preplanning takes the guesswork out of the common questions of “what do we do next” or “what would you have wanted”? A properly structured preplan ensures that your loved ones know exactly what to do, as well as instructions on how to most efficiently implement your bequests.

6.  After suffering the loss of a loved one, some of the biggest challenges your family will face are thing like time constraints, little or no experience with these matters, and limited access to the best possible help and guidance.  Therefore, one of the biggest advantages of creating a sound end-of-life plan is that, if it is properly structured, it can reduce (or even eliminate) the large majority of these difficulties.

7.  Through preplanning your funeral, as well as paying for your burial and covering your final expenses in advance, this creates a much better overall experience and memorial service for you, your family, and even your Funeral Director.

8.  Since preplanning reduces or avoids a great deal of the obstacles involved in planning a funeral, this extra time allows your family to work through other important matters such as dealing with the grief and loss, planning your memorial service, notifying your loved ones, creating your obituary, writing a eulogy, etc.  The more free time your family has, the much more likely it is they can create a truly special celebration of your life and memories.

9.  After completing your preplanning preferences for your family, this actually ends up enhancing your future too. By having these details planned out in advance, you can now enjoy the “peace of mind” to live every day knowing that you have taken the time to leave behind one of the greatest gifts of love.

10.  By selflessly taking the time to create a comprehensive end-of-life plan, you will always be remembered in a special way. Your family and loved ones will never forget the fact that you sacrificed your time and resources to take care of these all-important details. In reality, what you’ve done is created an everlasting memory that shows just how much you truly love the ones you care most about.

Action Item – Give Your Family What They Deserve:

When it comes to the things that are important in our lives, proper planning and preparation are some of the key to a successful outcome.  In this situation, my sincere hope is that these 10 reasons serve as an inspiration and incentive to start this planning and preparation today, and become proactive about these all-important estate planning matters. 

Although most families never talk about these kinds of things, just about every family member and loved one would prefer to have these plans in place.  Quite frankly, I think they should demand this from you.  So at the very least, leave your family with two things they absolutely deserve:

1) A Last Will and Testament (or Living Trust)
2) A Comprehensive End-of-Life Plan, which includes pre-arranging your final plans, preferences, and also your expenses

I can assure you that your family will thank you, see how much you loved and cared about them, and also remember your efforts as being one of the greatest gifts you have ever given them.

End of Life Planning

Your Family-Focused Gift of Love

Like so many families, when we suffered the loss of my mother last year we faced the difficult decision of what to do next. Because we were never willing to accept this as a possible outcome, nor did we think about planning in advance for this incomprehensible loss, we had no idea where to begin or who we could turn to.

Most people tend to overlook one of the greatest gifts you will give your family, which is properly preparing them for the inevitable. At best, you might have started your estate planning process by creating and choosing a Will or Trust.

However, the harsh reality is that approximately over 70% of Americans have no form of estate plan. So by having a will or Trust, you have clearly taken a step in the right direction toward preplanning your future financial wishes. The problem is, this form of planning fails to accomplish the most important task, which is addressing your family’s immediate concerns.

The person, or in most cases people, responsible for taking care of your final arrangements are usually forced to make extremely important decisions, as well as major financial purchases, within a small time frame…usually within approximately 48 hours after your death. Of course, you cannot expect to fully alleviate the emotional and financial stresses of your loved ones during such a difficult time, but you can help them tremendously by having a plan that outlines your funeral wishes.

Most financial professionals are realizing that an integral part of a sound financial and estate plan is taking care of your funeral services ahead of time.  To preplan a funeral gives you the ability to choose your method of disposition, the exact type of services you want, and allows your family to focus more on things such as grieving and recovery. In addition, preplanning is also a good thing for you because it allows you to make extremely important decisions through a calm and clear thought process. Emotionally, it is much more likely that you will create a more rational and logical end-of-life plan.

When preplanning your funeral, here are several general guidelines to begin your preplanning process:
* Visit various funeral homes and interview multiple funeral directors
* Choose a funeral home and director where you think your family would be most comfortable
* Consider bringing family members with you during this selection process
* Be aware and informed of bereavement entitlements such as veterans, unions, fraternities, etc.
* Consider religious and moral convictions, and discuss them with your family
* Determine your method of disposition (burial, cemetery, entombment, cremation, etc.)
* Plan your ceremony considering things like casket viewing, religious aspects, who should be included, etc.
* Itemize your costs
* The Federal Trade Commission offers a free funeral planning guide titled “Caskets and Burial Vaults” (202-326-2222) which has made it easier for consumers to comparison shop.
* The FTC Funeral Rule requires funeral directors to give pricing information over the phone, as well as provide you with a readily available General Price List if you visit them in person. This FTC Funeral Rule also allows you to purchase caskets, which are the single largest funeral expense, from outside vendors without the threat of a carrying charge.

What About Paying For Funeral Expenses In Advance?

Although planning your funeral arrangements in advance may help alleviate many of the details, prepaying (also known as prearranging or a PreNeed Plan) for your funeral services is a way of taking care of the actual expenses.

Prepaying your funeral or cremation is one of the fastest growing, and most appreciated and accepted aspects of funeral planning. Similar to preplanning your funeral, paying your funeral expenses in advance is also becoming widely accepted by many financial professionals as a solid piece of a sound financial and estate plan.

When prepaying your funeral plan, the most common and widely used strategies are savings and life insurance, mainly because they tend to be deemed the most reliable and readily available. However, there are several other strategies to consider when prepaying your funeral costs or expenses:

Savings

Although many people choose to set aside savings to pay for funeral expenses, there are several reasons this does not always end up working out as originally planned. First, the savings can be depleted based on unexpected financial circumstances, such as health or financial issues. Second, these funds are not always readily available and liquid upon death due to the challenges and restrictions often found in estate planning. Third, the funds set aside can often be insufficient due to inflation and the rising cost of funeral expenses. Finally, it should be noted that savings are included in a part of one’s estate, and, thus, the taxable consequences can often come into play.

Life Insurance

Term Life Insurance is widely considered to be a flexible, simple, and affordable way to pay for your final funeral expenses. Although Term Life Insurance has a set term, or set number of years, it also has multiple uses in prepaying for your funeral. Because upon your death it becomes a liquid asset that is usually not part of your estate, it can be used for many things such as funeral, burial, cremation, liquidity, and many other things, including debts or obligations.

In addition, there are some types of life insurance that allow the funds contributed to these policies (either in lump sum, monthly, quarterly, semi-annually, or annually) to grow and accumulate as a cash value that can be accessed if necessary. Therefore, these policies can not only be used for funeral expenses, but also for other financial planning options that may arise such as financial emergencies, college, etc.

Funeral Insurance

Funeral insurance is an insurance policy which is specifically designed to cover any costs or expenses which are directly related to your funeral. If you purchase one of these policies, one of the options you have is to determine exactly which funeral costs or expenses are to be covered, such as flowers, burial plot, grave marker, and much more.

Another option you have is for the policy to be paid out in a single lump-sum, which can be used to cover your pre-determined costs or expenses, or simply help your loved ones financially as they plan for you. There are many insurance companies that offer funeral insurance packages, and certain funeral homes or funeral companies also offer policies.

Pre-Need Trust Agreements

Another alternative to prepaying your funeral is to consider a Pre-Need Trust Agreement to pay for your costs or expenses. Generally speaking, these Trust accounts are typically funded with monthly payments that are invested in a fund which is designed to grow over time. Although a Trust account is designed to provide the potential for protection against inflation, it is not guaranteed to do so.

Take the First Step Today

In summary, although nobody likes to think or talk about dying, it is one of the facts of life we all must eventually face. If you are trying to build a successful financial plan, the only way you can be sure your plan works smoothly and efficiently is to be proactive about your planning process. This is particularly true and necessary when creating a proper plan of succession, which I firmly believe should include an end-of-life plan.

Christopher P. Hill, Founder