Life insurance has many varieties of policies, and each variety has its pros and cons. This flexibility makes life insurance an ideal form of estate planning. Some of the different varieties and uses of life insurance are:

1) Term life insurance is a short-term policy, generally 5 to 10 years. Term life insurance offers a low monthly premium, although it does not accumulate a cash value, even though the premiums typically increase each year.

2) Whole life insurance has a death benefit for the life of the insured, and it accumulates a cash value you can borrow against. The premiums are initially higher than term insurance, but they become comparable as the insured ages.

3) Survivorship life insurance policies insure two lives, usually a husband and wife, and benefits are paid out after both insured persons die.  The premiums are usually lower than a single-insured’s life insurance policy, and can be variable, universal or whole life insurance.

4) Universal life insurance has flexible premiums, an adjustable death benefit, and accumulates a cash value.  Although the accumulation value can fluctuate over time, the policy offers significant tax advantages for the beneficiaries.

5) Variable life insurance policies accumulate cash value, but they are much riskier. The policyholder invests the cash value accumulated by the policy into an investment account of their choice.  Although it can have a high return, it bears the risks of the market.

It is best to discuss your estate planning goals with a licensed broker to determine which type of policy best meets your needs to establish a plan for your beneficiaries.

The Law Office of Michael Robinson, P.C. is a member of the American Academy of Estate Planning Attorneys.

During your estate planning updates, evaluate whether you are fully insured.  Are your assets and well-being protected?  One, commonly overlooked insurance, is umbrella liability insurance.  It’s also known as “catastrophic liability insurance.”  And, you need it.

The term, “umbrella,” is used because the insurance sits on top of your home owners (or renters) insurance and your auto insurance and raises the coverage to the policy amount, $1 million, $2 million, $10 million.  It covers these two insurances like an umbrella.

It’s an incredibly inexpensive insurance and everyone should have it.  For example, you can get a $1 million dollar policy for about $150 per year.  You do have to pay for the underlying homeowners and auto insurances.  However, for the coverage provided, it’s a bargain.

Businesses also need catastrophic liability insurances.  For example, an employee may become distracted while driving on the job and cause a fatal accident.   Such was the case for one small construction company owner; he had a lot of sleepless nights, but the case settled, eventually, for just under his business catastrophic insurance limit.  His business and personal assets were spared.

• As a side note:  Consult your estate planning attorney about how you own your business so your personal assets are protected.

It’s very simple to obtain personal catastrophic insurance; it just takes a phone call or email to your property and casualty agent (auto agent) and your signature on a form.

When updating your estate plan, also be sure to analyze your other insurance coverage as well.  Do you have life insurance to replace your income, which loved ones depend upon?  Do you have appropriate malpractice, business, auto, home, renters, disability, earthquake, and hurricane insurances?

If you are unsure if your insurance coverage is appropriate, or if you want to learn more about umbrella liability insurance, consult with a qualified estate planning attorney.

The Law Office of Michael Robinson, P.C. is a member of the American Academy of Estate Planning Attorneys.

Many people don’t realize how expensive long-term care costs are.  As more people continue to age, the costs only continue to rise. This is why it’s important to consider the purchase of long-term care insurance.  Without this insurance, long-term care can be unaffordable.  Take a look at the information below, to better understand the use of this insurance.  If you have any questions, or if you need help selecting a long-term care insurance policy, contact an estate planning attorney.

Consider All Future Expenses

It’s important to have a plan in place for all of your future needs.  This includes preparing an estate plan that protects you and your loved ones throughout lifetime.  It’s also important to consider long-term care so that you’re not left to deal with costly care bills.

Long-term Care Can Cost $120,000 Per Year

Depending on the care that is needed, your care bills could be extremely high, over $120,000 a year.  This means that all of your money may go to these bills, making it impossible to live a normal, healthy, and comfortable life. Not planning for your long-term care needs may mean that you’re putting yourself in financial danger.

Long-term Care Doesn’t Mean Nursing Home Care

With long-term care needs, a variety of care services are covered.  This may include nursing home care, at-home care, rehabilitation services, and more.  There are a variety of policies to choose from so that all of your needs are met. It’s important to think ahead when choosing a policy, so that you’re always prepared.

Consult with a Qualified Estate Planning Attorney

Don’t put off this important aspect of planning.  Make sure that you have the financial means to pay for all of your future long-term care needs.  This will allow you to live a better life and get the help that is needed.  If you have any questions, or if you need help selecting the best long-term care insurance policy, consult with a qualified estate planning attorney.

The Law Office of Michael Robinson, P.C. is a member of the American Academy of Estate Planning Attorneys.

Life insurance plays an important role in estate planning – it can not only act as an income replacement should the “bread winner” of the family die unexpectedly, but it can be used to help pay the estate administration costs, fund a buy/sell agreement in a partnership or help pay off debt.  Life insurance can be complex and full of unfamiliar terms – even the basic types of policies aren’t familiar to the layperson:

Whole Life Policies:  Whole life insurance combines a term policy with an investment component. The investment could be in bonds and money-market instruments or stocks. The policy builds cash value that you can borrow against.

Term Life Policies:  A term policy is life coverage only. On the death of the insured it pays the face amount of the policy to the named beneficiary. You can buy term for periods of one year to 30 years.

For estate planning purposes, it would seem a whole life policy would be your best bet – but there are drawbacks to whole life policies:

1.         Expense:

Whole life insurance is expensive: You’re paying not only for insurance, but also for the investment portion.  While these policies do eventually have a cash value, it can take well over a  decade to get to that point.

2.         Your insurance company makes the investment choices, not you.

You lose the ability to select your own investment preferences with whole life insurance coverage.

3.         Whole life policies are not known for their high returns.

Whole life insurance, while offering you cash build-up and tax deferred earnings, is not noted for its high return-on-investment, primarily due to fees, as well as conservative investing by the insurance company.

Talk with an estate planning attorney to determine the role of a life insurance policy in your estate plan to help guide you toward choosing the policy that will help you meet your needs.

The Law Office of Michael Robinson, P.C. is a member of the American Academy of Estate Planning Attorneys.

Life insurance can play an important role in estate planning. Many families purchase life insurance policies to provide for their children should one, or both parents, pass away unexpectedly when the children are still under the age of 18.  Since many families buy the life insurance with the goal of providing for their children, they name their children as the beneficiaries of the insurance policy.  But is this the best way to handle it?

No, it’s not. If a minor is named as a beneficiary of a policy, the child may not be able to access the money until reaching the age of majority. Some states require the insurance company to hold the life insurance proceeds, with interest, until the child legally becomes an adult. Other states may allow the life insurance funds to be dispersed to a court appointed guardian until the child becomes an adult. Also, all of the proceeds are turned over to the child at age 18, often putting a large sum of money in the hands of a child who is not ready to handle it.

Yet, many children who have lost one or both parents, need the funds immediately. In order to make sure that your children can access the needed proceeds of a life insurance policy, an estate planning attorney can recommend an appropriate option. One of the most popular estate planning tools is creating a trust for this purpose.  A trust can name your children as beneficiaries with provisions that allow the trustee to distribute funds on behalf of your minor children. The proceeds of the trust may be transferred to your children when they reach an age that you specify.

Life insurance is a financial investment and a way for you to protect your family when you die. It is important that you protect your children by naming them as beneficiaries in a way that not only complies with laws of your state, but in a way that meets the specific needs of your family, and an estate planning attorney can work with you to discuss your options.

The Law Office of Michael Robinson, P.C. is a member of the American Academy of Estate Planning Attorneys.

Life insurance plays a valuable role in estate planning – not only can it be used to replace income if a “breadwinner” dies suddenly, but it can also help an estate pay its expenses, create liquidity for an estate that is heavily invested in real estate, or even create an estate where one might not have otherwise existed.  One major benefit of life insurance – the proceeds avoid probate, allowing the funds to pass more quickly to the named beneficiaries of the policy.

But what good is a life insurance policy if the beneficiaries don’t claim it?  It’s not by choice that they wouldn’t claim life insurance proceeds, but perhaps they do not even know the policy existed!  Shockingly, hundreds of millions of dollars in life insurance benefits go unclaimed each year because beneficiaries don’t know about them. The money is eventually transferred to state unclaimed property divisions that profit from the money in the meantime. In fact, The New York Times recently reported that since 2000, New York has received over $400 million in unclaimed life insurance property.

The state does post the information regarding unclaimed property both online and in local newspapers.  But the article goes on to detail the astonishing amount that remains unclaimed:

“New York has received $400,287,736 in unclaimed life insurance property since 2000 and paid out $64,772,228, said Vanessa Lockel, a spokeswoman for the Office of the State Comptroller. And that is just one part of the $10.5 billion the state has received in unclaimed property since 1943. Only about 20 percent of the property is claimed in any year.”

Make sure you have a conversation with your loved ones regarding your estate planning documents – giving them the “Who, What, Where, When and Why” can not only save your family from conflict upon your passing, but it can ensure that your family receives the inheritances that you intended.

The Law Office of Michael Robinson, P.C. is a member of the American Academy of Estate Planning Attorneys.

Life insurance is not only a means to provide for your family in the event of an untimely passing, but it can also be used to accomplish other goals within an estate plan.

1. Paying for funeral and estate expenses – A life insurance policy can be used to pay the costs of funeral expenses. There are several ways to accomplish this, including having a policy designated for these costs or making your estate the beneficiary of the policy. A life insurance policy can also be used to cover the cost of administering the estate, including paying probate fees, estate taxes and other costs, such as hiring a probate attorney to help with the process.

2. Establishing a life insurance trust – A life insurance policy owned by the deceased may be included in the value of the estate in many instances, which can result in estate tax exposure. A life insurance trust can remove the ownership of the deceased, thus removing the value of the policy from being included in the estate, which in turn removes the exposure to estate taxes.

3. Buying out a partnership – Many small businesses use a Buy/Sell Agreement when their partnership is set up, and proceeds from a life insurance policy can be used by the surviving partner to purchase the ownership interest of the deceased.

4. Creating an estate – Life insurance can be used to create an estate in situations where one might otherwise not exist due to the lack of assets.

5. Funding the purchase of the family farm – Life insurance proceeds can help pass the family farm, or other business, to a family member who may not have the cash reserves necessary to otherwise fund the purchase.

Life insurance is one of the many estate planning tools an estate planning attorney can discuss with you to determine which ones meet the needs and goals of your family.

The Law Office of Michael Robinson, P.C. is a member of the American Academy of Estate Planning Attorneys.

Many people purchase life insurance through an employer sponsored insurance plan, and they do so almost as an afterthought. But what people may not realize is that life insurance can play an important role in estate planning, and is just one piece of the puzzle in a comprehensive estate plan.

While many plan for the proceeds of a life insurance policy to replace the income of the deceased, there are other financial considerations and objectives that can be accomplished with a life insurance policy.

Access to Cash

Since an insurance policy has a named beneficiary, it often does not go through the probate process (unless the estate is named as a beneficiary), which is the legal process used in settling an estate. Since probate can take several months, a life insurance policy can help provide faster access to cash to pay for burial expenses, debts, and other expenses that will come up quickly.

Buy/Sell Agreements

A life insurance policy can also be used as part of a buy/sell agreement in a business. A buy/sell agreement is a contract between business partners that specifies who can buy a partner’s share of the business upon a triggering event such as death. A life insurance policy can provide the funds necessary to fund the buyout from the deceased’s estate.

Preserve the Family Business

Life insurance is also a method that can be used to provide cash when an heir has a contract to buy a family member’s farm or another business upon their death. This is often used to keep the business, particularly farms or ranches, in the family.

Life insurance is just one aspect of estate planning, a comprehensive approach used to ease the burden of one’s passing on their family. Working with an estate planning attorney ensures that each piece of the plan fits together and works to meet the families’ goals.

The Law Office of Michael Robinson, P.C. is a member of the American Academy of Estate Planning Attorneys.

Life insurance is a contract between the insurer and an individual in which a benefit is paid to a beneficiary if a covered event occurs. Life insurance is a valuable estate planning tool, but how much do you really know about this complex subject? We discuss five items that many people are not aware of when it comes to life insurance and estate planning:

1. Life insurance policies are not covered in wills or probate.

Since a life insurance policy is a contract and has designated beneficiaries, the policy would not be left to anyone via a will or trust, nor would it be included in probate.

2. There are two basic types of life insurance policies – whole life and term insurance.

Whole life policies pay a stated, fixed amount on your death, and part of your premium goes toward building cash value from investments made by the insurance company. Term insurance provides a benefit, usually a lump sum payment, if a covered event occurs.

3. The cost of life insurance is not normally tax deductible.

Many assume that since health insurance premiums are deductible, that life insurance premiums are tax deductible as well. Unfortunately, this is not the case. Life insurance premiums are only deductible in certain cases of self-employment.

4. A higher priced life insurance policy is not always the best choice.

A policy that is more expensive may not necessarily offer additional benefits or extra coverage. For example, whole life insurance, which combines life insurance with an investment that builds up cash value, may be up to eight times more expensive than a term life policy. This money may be better spent in an alternate investment, such as a retirement account.

5. Stay at home spouses may need coverage as well as the ‘breadwinner’.

Have you seen the cost of childcare and household services lately? Don’t discount the value of the services a homemaker or stay at home spouse provides.

Consulting with an estate planning lawyer helps you determine how life insurance can fit into your estate planning needs and build a comprehensive plan that eases the burden of your passing on your loved ones.

The Law Office of Michael Robinson, P.C. is a member of the American Academy of Estate Planning Attorneys.

It is conceivable that the majority of us will need some type of assisted care during our lifetimes. Of those over the age of 65, it is estimated that 50% of women and 25% of men will need to enter a long-term care facility at some point. Fortunately most of these are short stays for rehabilitation services, but there are still many that will stay longer. Recent surveys indicate that of all of the people that enter long term care facilities; about one third of them will be there longer than a year, and of those people, many will be in the facility longer than three years.

It’s true that most people want to remain at home and not enter a long term care facility, but due to circumstances there are times when this isn’t a practicality. If a person is in bad health and there is no one to care for them and no money to pay for in home care, sometimes the only way for them to receive the care they need is in a nursing home.

The unfortunate fact is that most of the people that are in a long term facility are there because they need 24 hour monitoring, or assistance with their personal needs. Some people are simply not strong enough to live at home, unless they have access to home care or an assisted living facility for seniors.

The Different Types of Long Term Care Facilities

When it comes time for you or your loved one to enter a senior care facility, you will choose the facility according to the level of care needed. Skilled nursing facilities provide more intense medical care; these facilities are appropriate for those that are seriously ill or injured. Most people that enter this type of facility are not usually there too long, as they may be moved after they have recovered.

Another type of facility is the nursing home, with this type of facility seniors will have daily help with their personal needs, as well as health monitoring by nurses and nursing assistants. This type of facility is appropriate for those that have mental or physical limitations that are not expected to improve over time. Many facilities offer both types of care in one location.

Another type of long-term care facility is the custodial care facilities. These facilities provide personal care, but only limited medical care. Due to the fact that the medical care is limited, the cost of this type of facility will be a lot less, though you can still expect it to cost $30,000 a year, and some cost several times this much.

The Cost of Long Term Care

One of the biggest problems people face with long-term care is the expense. If you need to enter a skilled nursing facility, you can expect the cost to be $300 to $500 a day. Fortunately, most people are not in this type of facility long and insurance companies as well as Medicare, will usually cover most of the cost.

For custodial care facilities however, the cost can be from $3,000 to $10,000 a month and this type of facility does not normally qualify for assistance from insurance companies, or Medicare. If you have a very low income, Medicaid may cover the expense but otherwise, it is left up to the estate or family to pay the cost.

Obviously, planning for the possibility of long-term care is an important part of creating your estate plan and the sooner you can start planning, the better off you’ll be. To learn more about long-term care and creating your own estate plan, contact our office today.

The Law Office of Michael Robinson, P.C. is a member of the American Academy of Estate Planning Attorneys.