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Expert Interview: Life Insurance & Your Estate Plan

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Two people looking at sunset

When you think about estate planning, life insurance doesn’t come to mind first. Your house, collectibles, and 401k? Sure. Yet, life insurance is present in almost every quality estate plan and can serve as a source of support, coverage, and liquidity to pay death taxes, expenses, fund business buy-sell agreements and sometimes to fund retirement plans. A life insurance policy, when used correctly, can be used to protect your estate and ensure your lasting legacy. Yet, for even the savviest of people who have a plan in place for the future, how life insurance fits into the estate planning puzzle can prove complicated.

puzzle pieces all mixed up

Enter Christa Payne, a Financial Representative for Country Financial in North Liberty, who was generous enough to share her expertise on the subject. Christa has been with Country Financial for over seven years and you can tell she’s passionate about what she does. She finds joy in being a part of planning for the future for all her clients.

Christa Payne
Gordon Fischer Law Firm (GFLF): In general, what role does a life insurance policy play within an estate plan?

Christa Payne: Generally, life insurance is a great vehicle to provide estate liquidity (in order to pay taxes, debts, administrative expenses, family allowance for surviving spouses and dependents). It can also provide debt relief or continuation plans (buy-sell for businesses, etc.), provide income replacement, and wealth accumulation…proceeds are paid to beneficiaries income tax-free!

GFLF: Can life insurance affect the amount of taxable assets of the estate?

CP: Yes, if you are the owner of the policy, it gets added into estate calculation (up to $5.49 million as of 2017). However, if you give up rights to the policy for longer than three years, it doesn’t have to be included. There are steps you can take to make sure that the death benefit or the replacement value don’t get included in the estate calculation.

GFLF: What are the options for charitable giving with/through a life insurance policy? Can you “give” or transfer your policy to a charity?

CP: Premiums can be deductible, but the owner and beneficiary both have to be the charity. Yes, you can transfer your policy to a charity or purchase a new one. Life insurance can be a great way to turn a smaller cash donation into a larger donation!

GFLF: What are some errors you’ve heard of/seen in regards to life insurance and estate planning? What should people know to avoid these pitfalls?

CP: There are many errors that can be made, including: listing the wrong beneficiary (or failing to update as things change—beneficiaries trump a will!) and having an inadequate amount of coverage in force are two major ones. People should always meet with a competent financial professional and attorney to discuss their life insurance and estate plan. It’s vital to complete annual reviews of the policy, as simple as that seems, things change, and it’s easy to forget. It’s always great to be reminded of what policy you have, how it works, and what will happen in the event of a death.

GFLF: What’s the difference for life insurance between revocable and irrevocable trusts? Is one category recommendable over another?

CP: In a revocable trust, there is no gift tax on funding the policy and it avoids probate. The death benefit, however, is included in the grantor’s gross estate. In an irrevocable trust, it avoids probate, has asset protection against creditors, and is excluded from gross estate. One is not necessarily better than the other, it depends on the specific needs of each individual client at the time the trust is established.

Let’s Talk About Your Life Insurance

Take it from Christa, life insurance as a part of your estate plan is important. If you have questions on her advice or think you need a new/updated policy, don’t hesitate to give her a call at 319-626-3516 or shoot her an email. (A resource like this research can also be useful in comparing insurance plans.)

Of course, you also need an estate plan before life insurance an be a part of it)!  Contact me to get started or fill out my obligation-free estate plan questionnaire.

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Read GoFisch: June Edition

GoFisch is ever-evolving and I tried out a new look on this month’s newsletter. Give GoFisch a read, subscribe, and share it with your friends & colleagues to stay in-the-know with all things Gordon Fischer Law Firm. (If you missed last month’s edition of GoFisch, you can read it here.)

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Survey Results: You Spoke, I listened

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Two men having a conversation near the ocean

Several weeks ago, I held a survey about estate planning, through my GoFisch newsletter, blog, and social media platforms. I received over a hundred responses! Considering the sensitive and, indeed difficult subject matter, I thought this was a very significant number.

Action Time

You spoke loud and clear, and I heard you.

Child yelling into microphone

You don’t understand what an estate plan is. You’re not sure why you need an estate plan. You don’t know the process of putting together an estate plan. That’s understandable! Estate planning isn’t something most people deal with every day.

So, I wrote a series of short, but relatively thorough blog posts on each of these subjects, in plain English, free from legalese.

I explain what an estate plan is and outlined the six “must-have” documents everyone needs. I also detailed what a trust is, and about its benefits, here.

I wrote on the consequences of dying without an estate plan.

I also set forth my simple five-step process to get to a complete estate plan here.

But, that wasn’t enough, not nearly enough, by my own standards. Plus, actions always speak louder than words.

Cost Concerns Resolved

One of the most common concerns survey respondents cited was cost. There was tremendous confusion about how much an estate plan could/should cost. Some worried about the price being unaffordable for middle class Iowa folks. Worse, some respondents were genuinely fearful they would be told one price, and then pressured to a more expensive “package.” Or, that there would be a bunch of hidden fees and costs. Then there was the fear that you wouldn’t even know how much the estate plan would cost, until it was all over, and you got a bill (and by then, presumably, it would be too late to do anything about it if you thought the bill high or otherwise unfair). This approach, or the other with hidden fees, simply won’t fly with me; it’s advantageous for me to be transparent with my fee structure.

Estate Plan Sale

Again, actions always speak louder than words. You said you were concerned with cost, so I’m holding an estate plan sale.

estate plan sale image

For a limited time only (June 15 to July 15, 2017), you can receive a standard estate plan (which consists of the six “must-have” estate planning documents) for only $500. You will be billed only at the conclusion of this process, when you are executing the documents. So, obviously, you won’t pay anything until you are completely satisfied with both the plan and your understanding of the plan.

What if you need, or want, something more than the standard estate plan? Like, say, a revocable living trust? A standard estate plan, including a revocable living trust, will only cost you $1,000.

Let’s Talk…and Talk & Talk

I should note that either package comes with as many consultations (meetings, emails, and phone calls) with me as you reasonably feel we need to finish your estate plan. Again, you’re not sitting down to execute the documents, and so you’re not being billed (let alone paying anything!), until you are completely satisfied with both the process and the results of the process.

Now! Right Now!

Again, the special deal of $500 for a standard estate plan, and $1,000 for a standard estate plan plus a revocable living trust, will last only a limited time, June 15 to July 15, 2017. So, ACT NOW and do not wait!

Gordon Fischer discussing an Estate Plan with a Client

Contact Me

You can reach me most easily by email at gordon@gordonfischerlawfirm.com or call my cell, 515-371-6077. Don’t delay, write or call today.

A great place to begin thinking about estate planning is with my free, no-obligation Estate Planning Questionnaire.

Disclaimers
The Estate Plan Sale merely relates to pricing and in no way creates an attorney-client relationship, nor any other kind of professional relationship.
The Estate Plan Sale merely relates to pricing and does not create a contract or agreement of any kind.
GFLF, P.C. retains full and total discretion as to who it chooses to serve as clients and why. GFLF, P.C. retains the right to refuse service to anyone it chooses.
The Estate Plan Sale may not apply to individuals or families with a net worth of more than $1 million dollars. (You still need an estate plan, very much so, but it necessarily needs to be much more “complex.”).
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