Insurance

Thursday, March 03, 2011

NEET Tips

NEET Tips answers questions posed online to the NEET website

Is a life insurance policy that has a beneficiary designation part of one’s probate estate?

If a life insurance policy has a proper beneficiary designation, and the beneficiary is alive to receive the proceeds, then the life insurance proceeds should not be part of the Vermont probate estate. Proceeds from life insurance policies pass via contract, which supersedes the provisions of a will.

Keep in mind that one’s probate estate is different from one’s taxable estate. Proceeds from life insurance policies are usually included in the decedent’s taxable estate, unless the policy is owned by an irrevocable life insurance trust (ILIT).

For more information on life insurance and beneficiary designations in estate planning, see the NEET articles:

Uses of Life Insurance in Estate Planning

Doubling Life Insurance Proceeds With an ILIT

Beneficiary Designations Are the Final Word

Friday, September 17, 2010

Press Coverage of Estate Planning this Week (September 17, 2010)

Deborah L. Jacobs writes in the New York Times of ways to reduce exposure to future estate taxes without giving away all of your money. Her list includes purchasing life insurance, remarrying and leaving assets to your new spouse, lending money to family members at today’s low interest rates, and contributing to a 529 education savings plan. See Devising Strategies While the Estate Tax Is in Limbo (Sept. 15, 2010).

Bob Carlson writes in Retirement Investing about events that might prompt a review and updating of your estate plan. Factors that argue for a review include: changes in investment values or net worth; changing personal values; changing tax laws; an evaluation of whether your fiduciaries are still the best people for the specific task; and changes in your personal life, such as a death or divorce in the family. See Knowing When to Revise a Plan (Sept. 13, 2010).

Friday, June 11, 2010

Press Coverage of Estate Planning this Week (June 11, 2010)

David Kocieniewski of the New York Times reports that Dan L. Duncan may be the first American billionaire able to pass his fortune to his heirs estate tax free. The estate, estimated at $9 billion, will likely give Congress pause in attempting to reinstate the estate tax retroactive to January 1, 2010, as the Duncan heirs would have ample means to fight such a law in the courts. See Legacy for One Billionaire: Death, but No Taxes (June 8, 2010).

Deborah L. Jacobs of Forbes suggests taking some steps now in preparation for the return of the estate tax in 2011, including reviewing life insurance policies, ensuring not all assets are jointly owned with your spouse, considering annual gifts, funding college savings plans, and converting to a Roth IRA. See Prepare For the Return of the Estate Tax (June 9, 2010).

Ashlea Ebeling of Forbes reviews the status of state-imposed estate and inheritance taxes for 2010. Currently, 19 states impose an estate and/or inheritance tax. That could change abruptly in 2011, depending on what happens to the federal estate tax. See The State Estate Grab, 2010 Edition (June 9, 2010).

Stephanie Fitch of Forbes discusses Qualified Personal Residence Trusts as a means for protecting the family vacation home so that your children and grandchildren can enjoy it as much as you do. These trusts, informally known as QPRTs, make sense when property valuations are low both to pass along sizable assets and reduce final estate taxes. See How to Pass Down Your Family Vacation Retreat (June 9, 2010).

Mark Maremont and Leslie Scism of the Wall Street Journal tell the story of an elderly wealthy investor who purchased $56 million of life insurance and then assigned or sold the rights to the death proceeds to investors. The decedent’s spouse claims this violates public policy and New York laws, and thus she should be named the beneficiary. The case will likely impact the viability of what is known as “stranger owned life insurance.” See Lawyer’s Heirs Fight Insurers in $56 Million Policy Intrigue (June 11, 2010).

Friday, May 01, 2009

Press Coverage of Estate Planning This Week (May 1, 2009)

Michael G. Shinn writes in The Seattle Medium that estate planning is the most overlooked area of financial planning.  He quotes a funeral home director who claims that 80-90 percent of decedents don't have any estate planning.  See Your Money Really Matters: "An Encounter with the Undertaker" (Apr. 29, 2009).

Paul Sullivan of the New York Times writes about the basics of life insurance and disability insurance, and how they sometimes function as estate planning tools.  See Life and Disability Insurance: What You Need to Know (Apr. 29, 2009).

Kathleen M. Rehl writes in Investment News how a legacy letter, also known as an ethical will, can enhance what you leave to your children, and also be a profound experience for the writer.  See Passing on More Than Just Money (Apr. 26, 2009).

Kirk Shinkle of U.S. News and World Report discusses ways to efficiently make lifetime and testamentary gifts to those most important to you, including your pets.  See How to Give: Tips for Passing on Wealth to Kids, Your Charity, and Your Dog (Apr. 28, 2009).

Shaila Dani of the Associated Press discusses how the depressed economy makes this a good time to pass on assets to your children through gifts, intra-family loans, family limited partnerships and charitable lead trusts.  See Downturn Markes it a Good Time to Share Wealth (Apr. 26, 2009).