New York Trusts & Estates

Responsible and Loving Adults Know the Importance of Life Insurance in Yorktown Heights, NY

 

Adults with spouses and children need life insurance to protect those they love. Maybe that's corny, but it is true. Don't let the complexity scare you; your family will thank you.

Just as we are still reluctant to discuss death, we still have a predilection to push back against discussions concerning life insurance. Too morbid. Too complicated. But in "10 Things You Absolutely Need To Know about Life Insurance," Forbes presents a compelling argument to go past any preconceived notions that cause anyone to avoid this important personal finance tool.

With the proper information, you can simplify the decision-making process and arrive at the right choice for you and your family.

Here are some of the things you absolutely need to know about life insurance:

You really need it if you are someone's spouse or the parent of dependent children. If you are retired or financially independent and no one would suffer financially if you weren't around—OK, you don't need life insurance.

Life insurance doesn't just slap a monetary value on your life. Rather, it helps compensate for the financial consequences that accompany the loss of a wage earner's life. It can help those left behind cover the costs of final expenses, outstanding debts and lost income. After an unexpected death, life insurance can lessen financial burdens at a time when surviving family members are dealing with great loss. It can also give peace of mind to the policy holder.

Life insurance is a risk management tool, not an investment. There are some life insurance policies that have an investment feature, but they're not really an optimal investment. There are usually better and more efficient strategies.

There are two kinds of life insurance—term and permanent, also known as whole life insurance. Term life is the simplest, the least expensive, and the most widely applicable. The life insurance company bases the policy premium on the probability that the insured will die within a stated term—typically 10, 20 or 30 years. The premiums are guaranteed for the length of the term, then the policy becomes cost-prohibitive to maintain—or you can decide to let it lapse. This means that you could pay premiums for decades and "get nothing out of it." That's good news because it means you were protected during that time.

Permanent life insurance includes the same probability-of-death calculations but also includes a savings mechanism, often referred to as "cash value." It's designed to help the policy exist into perpetuity. Whole life has an investment component, and variable life has investment options more like mutual funds. Universal life is a less expensive permanent life insurance alternative with added flexibility but increased interest rate risk for the owner.

Choosing the right life insurance policy doesn't have to be complicated. It's better to set up something you can work with and understand than to postpone such an important decision due to the policy's intimidating complexity. In many circumstance, a good rule of thumb is to purchase enough life insurance to replicate all or most of the insured's income for a term as long as the household expects to need that income.

We can't say it enough – it's better to discuss with your loved ones what would happen in the event of an untimely demise than it is to let them struggle through a terrible time with no planning or advance discussion. By meeting with an estate planning attorney and purchasing the appropriate life insurance plans, your loved ones will be prepared in some way – and they will be grateful to you for looking out for them.

For more information on Estate Planning, Life Insurance, Minor Children; please click to my website

A Primer on Life Insurance: Term, Whole, and Why You Need It in New City, NY

 

It's not going to make you the most popular person at the party, but life insurance is a necessary part of adult life, and one that most of us don't think about very often. When was the last time you did a risk management assessment to make sure that you have the right kind of insurance policies for your age and stage of life? Today there are so many different types of policies that it can be confusing, and many people find this frustrating, so they simply ignore this part of their financial life. Knowing what types of policies are available, what you need and making sure that the right insurance is in place can be a valuable part of your overall estate plan.

It's no surprise that many Americans have chosen not to have any life insurance at all, according to NASDAQ's recent article, "Why Have Life Insurance?" A recent study by a life insurance advocacy group, LIMRA, revealed that most Americans think that life insurance is expensive. They were asked to name the price of a 20 year, $250,000 level term life policy for a healthy 30 year old and were off by several hundred dollars. The anticipated annual cost was $400, while the real cost of such a policy is more like $150. The study found that 85% of Americans are not buying life insurance, and this price perception may be part of the problem. That's not including the people who purchase insurance that is not right for their needs, who overpay for insurance, or those who are insured for so little that their unexpected passing will assuredly put their family's financial future at risk.

That's why it's important for you to sit down annually with an insurance professional to review your policy and also to speak with your estate planning attorney about the role life insurance may play in your overall estate planning strategy. Reviewing your life insurance policies is one way to make sure you have the coverage that is right for you and your family as you age and your family situation changes.

Basic Types of Life Insurance

Finding the right policy may be easier than you think. There are really just two basic types of life insurance: term and cash value. Cash value, or "permanent," life insurance policies offer death benefits and some investment qualities, as some of the money you spend on the policy goes into a savings program. Cash value policies have higher premiums than term policies because term life offers only death benefits during the policy term. Term can be a good option for young adults because it's pretty inexpensive.

Term life has its drawbacks. If you outlive the term of the policy, you or your family get nothing back. Term life policies can be renewed, and some can be converted to permanent coverage.

The big question is how long do you plan to keep the policy? If you'd rather not have to pay premiums for decades, term life may be more attractive, especially if you're just looking for a short-term hedge against the unforeseen. If you are looking at estate planning, permanent life insurance may be a better choice.

Talk with your estate planning attorney before you start spending money on a policy. He or she can help you compare term vs. permanent insurance options to help you create a strategy to make sure that your coverage adjusts over time as your family needs change.

For more information on  Estate Planning, Life Insurance, Estate Planning Lawyer, Planning for the Future; please click to my website.

Beneficiary Designations 101 in New City, New York

The decision about how to designate beneficiaries for your company retirement plan, life insurance policies, and other assets might seem like a no-brainer. Chances are you would like those near and dear to you to inherit any money you've accumulated during your lifetime, so making sure that happens should be as simple as writing their names on the appropriate forms, right? Not so fast.

Have you designated beneficiaries on the appropriate accounts? Are you sure you did it right?

A good estate plan uses a wide-variety of vehicles to distribute the estate. Today, that normally means that retirement accounts and life insurance are used to help quickly distribute assets to heirs after someone passes away. Because of this importance, you need to know how to go about designating beneficiaries to receive the assets.

A recent article in Morningstar, titled "How to Handle Beneficiary Designations," provides a list of things you should consider, to include:

• Know the basics - It is important to know what documents you can use to designate assets to beneficiaries and know that the assets will automatically pass to the beneficiaries after you pass away.
• Keep Designations Current - You should review your designations regularly and make changes as appropriate.
• Consider Tax Consequences - Your beneficiaries might have to pay taxes on the assets.
• Be Specific - If you want a beneficiary to distribute the assets to other heirs, you need to state how specifically.
• Give special consideration to special needs loved ones - Consider how heirs with special needs will inherit and handle the assets.
• Know about other estate planning tools - You need to know what else you can do to plan your estate.

The list is a good one and the last item is perhaps the most important. You cannot use beneficiary designations in this way for all of your property, so visiting with an estate planning attorney about what else you need in an estate plan is a must.

For more information about Estate Plan, Estate Planning; click to my website http://www.parkertrustlaw.com/

Reference: Morningstar (October 10, 2014) "How to Handle Beneficiary Designations"

Baby On Board? Time To Discuss Life Insurance and Estate Planning in Yorktown, New York

Why would parents procrastinate on something that it so important to their family’s well-being? The fact of the matter is that life insurance and estate planning are two topics that most people just don’t want to talk about. It is no fun to think about your own demise and picture your growing family without you in it.

If you are expecting a new baby or are already new parents, you're biggest concern may be having enough diapers in the house. But there's so much more to discuss than diapers and formula. Have you had the life insurance talk yet? What about estate planning?

A recent article in The Kansas City Star, titled "Money Matters: Two things that new parents should not put off...but usually do," lists several items that new parents should consider when examining their life insurance.

Childcare. If one spouse is no longer in the picture, odds are the surviving spouse is going to have to work outside of the home to keep paying the bills. Childcare can take a big bite out of your take-home pay.

Mortgage and Other Monthly Debt. This category can make or break many household budgets. The mortgage and regular monthly bills come due the same time every month without fail. The original article suggests that you purchase at least enough life insurance to satisfy the balance of the mortgage if one parent passes away.

College Tuition: Even if college is a long way off, the sooner you start saving, the better. Some parents carry enough life insurance to pay the full cost of four years of college for each of their children. Some parents also might have private school expenses before college kicks in.

In addition to these categories, The Kansas City Star also discusses income replacement and the importance of creating a will. A will is the most important thing you can do to ensure that your child has the care he or she needs in the event you are incapacitated or pass away suddenly.

Life insurance, your children's future, and planning for your own passing are heady subjects that few want to tackle. Nonetheless, it is essential you do so. Speak with your estate planning attorney and create a strategy that will make a big difference for your family’s future.

For more information about Estate Planning, Wills, Trusts, Probate, Trusts and Estates, Asset Protection, Probate Court, Inheritance, Estate Planning Lawyer, Power of Attorney, Tax Planning, or Probate Attorney; click to my website

Reference: The Kansas City Star (August 14, 2014) "Money Matters: Two things that new parents should not put off...but usually do"

Estate Tax Liabilities and Life Insurance in New City, New York

“While there are a number of ways to address estate tax liabilities and retirement savings distinctly, developments in the life insurance arena are providing new and potentially better options. These strategies are highly versatile to meet the evolving needs of the individual many years into the future.”

As those in business well know, there are really only two ways to deal with a potential business liability: proper planning and execution on the one hand, and proper use of insurance on the other. Many find both approaches can also work in tandem to effectively achieve their estate planning and retirement goals.

The use of insurance to deal with an estate tax liability inevitably brings us to the topic of life insurance. In fact, an interesting approach was advocated recently in a Forbes article titled “Life Insurance For Estate Taxes And Retirement.” Why life insurance? Well, while the fundamental risk life insurance is meant to resolve is the loss of income upon the death of a breadwinner, it can cure the problem of illiquidity when estate taxes are due. That is especially helpful if real estate or other illiquid assets are what is driving your estate to taxation in the first place.

These sorts of insurance already have to be balanced so as not to create further tax liabilities. How does the life insurance work for you in life? As you can read the original article, there are ways to draw upon it in the form of a loan for retirement income without actually eliminating the death benefits payout.

There is much to say on the topic, but knowing the option is there can make a world of difference in how you structure your affairs. What else can you do and what else are you concerned about? When considering life insurance, remember to consult with competent estate planning legal counsel.

For more information on Estate Planning; Estate Tax; or Life Insurance; click to my website

Reference:  Forbes (June 11, 2014) “Life Insurance For Estate Taxes And Retirement”

No Need For Your Life Insurance in Yorktown, New York? Donate It!

There are several ways to donate a life insurance policy to charity, according to the Planned Giving Design Center, Monroe, NC.

There are many advantages to life insurance as it can be a cushion against high-cost issues or a source of much-needed cash flow for your family. However, you might end up not needing it all. If this is the case, what do you do with the policy?

The good news is that you can kill two birds with one stone. Have you thought about donating your life insurance to a worthy cause?

WealthManagement.com explained the motive and the usefulness of the approach a short time ago in a recent article titled “Donating Life Insurance.”

What if it turns out that you won’t need that life insurance policy for which you scrimped to pay premiums over the years? Your children are grown and on their own, plus you have built up enough wealth to carry you and your spouse through retirement. Perhaps you have forgotten about that old policy sold to you by a college buddy when he was just getting into the business. In short, the policy is “found money” you really do not need now.

Consider this: your favorite charity could make good use of your policy and its eventual proceeds. Charities in the know are far more amenable to such unique gifts than you might realize. Now, instead of the eventual proceed being a potential tax burden to your estate, you can claim a current charitable deduction. Two birds with one stone.

Be sure to read the original article for more of the particulars. Then, before taking action, schedule a consultation with your estate planning attorney to make sure you connect all of the dots and get the best benefit while doing the most good.

For more information about Charitable Giving, Estate Planning, Estate Tax, Life Insurance see my website.

Reference: WealthManagement.com (March 18, 2014) “Donating Life Insurance”