LeTip Golden Triangle

Insurance for Two Could Benefit Your Heirs

admin — Sat, 04 Feb 2012 17:07:56 +0000

Since the federal estate tax was established in 1916, the amount exempted from the tax has been raised substantially over time. The $5 million exemption for 2011 and 2012 is the highest in history, and the 35% top estate tax rate is the lowest in 70 years.¹

However, these generous provisions may not last. After 2012, the federal estate tax is currently scheduled to revert to a $1 million exemption and a 55% top tax rate. Many families with a home and large retirement accounts could easily have estates worth $1 million or more. A survivorship life insurance policy is one way to help heirs pay estate taxes, probate costs, and other final expenses.

Preserving a Legacy

Also called second-to-die insurance, a survivorship life insurance policy insures two people and pays a benefit after the death of the second person. The premiums are usually less expensive than premiums for a single life insurance policy, because they are based on the life expectancies of both insured individuals.

The unlimited marital deduction allows assets to pass to a surviving spouse free of federal estate taxes, so estate taxes typically do not become an issue until estate assets pass to non-spouse heirs. Thus, a survivorship life insurance policy could pay a benefit at the time it may be needed most.

Moreover, by purchasing the survivorship policy in an irrevocable life insurance trust, the proceeds may not be considered part of your taxable estate. The use of trusts involves a complex web of tax rules and regulations. You should consider the counsel of an experienced estate planning professional and your legal and tax advisors before implementing such strategies.

Even if you are not concerned about the estate tax, a survivorship life policy could be a relatively inexpensive way to leave a legacy, especially considering that an individual life insurance policy may be more expensive or difficult to obtain later in life. Survivorship life might also be used to insure business partners.

The cost and availability of life insurance depend on factors such as age, health, and the type and amount of insurance purchased. Before implementing a strategy involving life insurance, it would be prudent to make sure that you are insurable. As with most financial decisions, there are expenses associated with the purchase of life insurance. Policies commonly have mortality and expense charges. In addition, if a policy is surrendered prematurely, there may be surrender charges and income tax implications.

With the uncertain future of the estate tax, now may be a good time to consider a survivorship life insurance policy. Even if the estate tax doesn’t apply to your estate, the insurance proceeds could benefit your heirs or a favorite charity.

1) Internal Revenue Service

The information in this article is not intended as tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax or legal advice from an independent professional advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material was written and prepared by Emerald. © 2012 Emerald Connect, Inc.

Tony Ricci, CFP®
2831 Camino Del Rio South, Suite 101San Diego, CA 92108
Phone: 619-297-9770, Ext. 13
ariccisd@gmail.com
www.YouHealthQuote.com and www.TonyRicciCFP.com

Evaluating Life Insurance Needs

admin — Tue, 22 Nov 2011 22:33:45 +0000

Because life insurance typically becomes more expensive as we age, many people may believe they can’t afford to purchase coverage later in life. However, considering that life insurance is significantly less expensive today than it was a decade ago, you might be able to purchase new coverage and pay premiums comparable to those that were available when you were 10 years younger.1

It’s a good idea to review your life insurance situation on a regular basis. Here are some reasons why your coverage may need to evolve to keep pace with your life.

Life Changes
If your income and/or net worth have increased significantly since you purchased your policy, ask yourself whether your current coverage would enable your survivors to maintain their current standard of living. Major life events such as birth, marriage, death, and divorce may also affect the amount of coverage you need.

Inflation
Because of inflation, a policy purchased years ago may no longer offer the same level of protection. For example, a 3% inflation rate can cut the purchasing power of a death benefit in half in about 24 years, based on the Rule of 72 (72 ÷ 3 = 24 years).

Estate Conservation
One popular reason for owning life insurance is to provide liquid funds to help heirs pay estate taxes and any other debts. Considering that the estate tax has changed several times over the past decade, it’s a good idea to review your coverage in light of current estate tax laws and your net worth.

As with most financial decisions, there are expenses associated with the purchase of life insurance. Policies commonly have mortality and expense charges. In addition, if a policy is surrendered prematurely, there may be surrender charges and income tax implications.

1) USA Today, December 3, 2010

Tony Ricci, CFP®
2831 Camino Del Rio South, Suite 101
San Diego, CA 92108
Phone: 619-297-9770, Ext. 13
Fax: 619-297-0549
www.YouHealthQuote.com
www.TonyRicciCFP.com
ariccisd@gmail.com

Federal Estate Tax Is Much Lower — For Now

admin — Fri, 04 Nov 2011 10:57:32 +0000

The federal estate tax was repealed in 2010, and then reinstated by the 2010 Tax Relief Act with new provisions for 2011 and 2012. These provisions include a higher exemption amount and a lower tax rate that could ease or eliminate the tax burden on many estates.

Although the reinstated estate tax may not affect you now, it is scheduled to become more aggressive in 2013 and beyond, potentially affecting many families who might not be considered wealthy.

What’s New?
For estates left behind in 2011 and 2012, assets exceeding a $5 million exemption will be taxed at 35%, the lowest top tax rate in 70 years. A new portability provision allows surviving spouses to use the unused portion of a deceased spouse’s exemption, provided he or she makes the appropriate declaration on the estate tax return. Thus, married couples may be able to pool their exemptions to shield up to $10 million from federal estate taxes. The law also brings back the ability to “step up” the basis of assets to the fair market value on the deceased owner’s date of death.

Options for 2010
Estates of 2010 decedents can choose the 0% federal estate tax that was in effect that year, when the modified carryover basis rules were also in effect. (Under these rules, heirs must use the lesser of the decedent’s basis or the fair market value on the date of the owner’s death when calculating capital gains.) Alternatively, decedent estates can choose the reinstated estate tax and the new provisions. Their choice may affect capital gains taxes on some estate assets.

What’s Next?
Without further legislation, the federal estate tax will revert to a $1 million exemption and a top tax rate of 55% in 2013. The portability provision is also scheduled to expire after 2012. These changes could subject many more estates to the tax than under current law.

No one can anticipate what will happen in the future, but it’s important to be aware of the temporary estate tax provisions and the potential for change in 2013. Before you take any specific action, be sure to consult with an experienced estate, legal, and/or tax professional.

Tony Ricci, CFP®
2831 Camino Del Rio South, Suite 101
San Diego, CA 92108
Phone: 619-297-9770, Ext. 13
Fax: 619-297-0549
www.tonyriccicfp.com
ariccisd@gmail.com

Understanding the Sacrifices of Family Caregivers

admin — Mon, 24 Oct 2011 22:55:22 +0000

About 44 million people, roughly 19% of the U.S. adult population, provide unpaid care to someone who is age 50 or older. The average age of caregivers is 50 and the average age of care recipients is 77. Most caregivers assist family members, usually their mothers.1

Although many caregivers help their family members out of love, there is overwhelming evidence that caregivers pay a dear price for their compassion. Nearly half reported increased financial worries and having to use sick time or vacation hours to provide care (see table).2

One especially telling statistic: More than four in 10 caregivers said they felt as though they had no choice about whether to assume the role of caregiver.3 This may indicate that little or no preparation took place before caregiving began. Yet when it comes to their own potential need for long-term care, 55% of Americans say that their greatest concern is becoming a burden to family members.4

Fortunately, you can start developing a strategy today that could help you provide for your own care and avoid becoming a burden to your loved ones.

Recalculate Retirement Needs
The obvious reason for having to turn to family members for care is money — or, more accurately, a lack of money. The national average cost for nursing-home care is $74,208 per year.5 How likely are you to need specialized care? Forty-three percent of people who reach age 65 will eventually spend time in a nursing home.6

If your retirement-needs calculations don’t take the potential need for long-term care into account, it may be time to evaluate your options for covering the potential costs. If you have a family member who may need care, the earlier you begin to prepare, the greater the possibility that you may be able to reduce the effect on your own finances and lifestyle.

Talk About It
Whether you are a caregiver or a care recipient, a financial professional can open a dialogue that helps preserve dignity and harmony while also coordinating decisions about common concerns, such as which care options are appropriate, whether the care recipient should move, how to manage property and possessions, and how to handle legacy issues.

Because it could be years before you find out whether you need living assistance, the most prudent approach could be to assume that you will and to begin preparing now. If it turns out that you don’t need care, there’s no penalty for being prepared.

1, 3) National Alliance for Caregiving, 2009
2) Money, September 2010
4) Journal of Financial Planning, June 2010
5–6) 2010 Field Guide, National Underwriter (2009 costs, latest year for which data was available)

Tony Ricci, CFP®

www.YouHealthQuote.com
www.TonyRicciCFP.com
2831 Camino Del Rio South, Suite 101
San Diego, CA 92108

Phone: 619-297-9770, Ext. 13
Fax: 619-297-0549

Mortgage Broker – Anthony Madruga

admin — Mon, 17 Oct 2011 19:58:00 +0000

E-mail: anthony.madruga@mortgagefamily.com

Health and Nutrition – John Martin

admin — Mon, 17 Oct 2011 19:56:00 +0000

E-mail: jmartin@ildglobal.com

Stock Broker – Matthew H. Hurley

admin — Mon, 17 Oct 2011 19:53:44 +0000

E-mail: matthew.hiurley@opoc.com

Computer Repair and Management – Prakash Gupta

admin — Mon, 17 Oct 2011 19:51:36 +0000

E-mail: pgupta@eplanetsystems.com

Chiropractor – Craig Ditzler

admin — Mon, 17 Oct 2011 19:49:09 +0000

Ditzler Family Chiropractic

Dr Craig A. Ditzler D.C has been in practice in San Diego since 1985. He treats all ages from newborns to seniors in their 90′s. He uses chiropractic methods, diet and nutrition to treat various conditions. Neck, midback, and lowback problems in additon to headaches and numerous internal problems. Call now for a no charge consultation.

Address: 3202 Governor Dr, #200
San Diego, CA 92122
Phone: 858-452-2202
Fax: 858-452-23

E-mail: ditzlerchiro@earthlink.net
Web: www.ditzlerchiropractic.com

What You Don’t Know About Life Insurance

admin — Tue, 12 Oct 2010 13:47:51 +0000

Many of us are conditioned to believe that a family only needs to own life insurance on a primary breadwinner. This could explain why men tend to own more life insurance, on average, than women (although men and women both tend to be underinsured).1

The common perception is that life insurance is primarily needed to help protect young families in the event that a major wage earner dies before the children are grown. The reality is that far more people either need or could benefit from owning the appropriate life insurance policy. Here are some uses for life insurance that you may never have considered.

To help replace both the income and the non financial resources provided by a household member other than the primary breadwinner. Many households overlook the need to protect against the loss of a family member whose primary contribution to the household may not necessarily be money but unpaid work that helps support the primary breadwinner’s ability to earn money. For example, consider a family in which one spouse works and the other spouse cares for small children and oversees other household responsibilities. If something were to happen to the stay-at-home spouse, the surviving earner might find it difficult to keep working and provide care for the children. The cost of child care or an in-home worker to help take care of the kids could be substantial, and if the surviving spouse i s unable to meet them, he or she could be forced into working less, saving less for retirement and college, and/or adopting a lower standard of living.

To cover a mortgage, final expenses, taxes, and debts. People who have no dependents or a spouse often believe that they don’t need life insurance. But one of the primary reasons to own life insurance is to pay bills and other expenses that would otherwise be borne by someone else, such as parents, other family members, or any heirs. Life insurance can help pay debts, medical bills, funeral and burial expenses, and probate costs, as well as help increase the size of the decedent’s legacy.

To leave a legacy. A life insurance policy can help turn a modest financial gift into a large legacy. In some cases it may make more sense to use money that was earmarked for a charity, family member, or friend and instead use it to buy a life insurance policy with the charity or heir named as beneficiary. As long as the donor can keep the policy in force, the amount of the death benefit may be far greater than the cost of the premiums.

To help generate income. Policyholders may borrow against the accumulated cash value of a permanent life insurance policy for any number of uses, such as supplementing retirement income, paying off a mortgage, or sending family members to college. Access to cash value is through withdrawals or loans. Policy loans do not have to be repaid, but they reduce the cash value and death benefit by the amount of any outstanding loan balance plus interest. One additional benefit: withdrawals and loans are not subject to income taxes.

The cost and availability of life insurance depend on factors such as age, health, and the type and amount of insurance purchased. Before implementing a strategy involving life insurance, it would be prudent to make sure that you are insurable. As with most financial decisions, there are expenses associated with the purchase of life insurance. Policies commonly have mortality and expense charges. In addition, if a policy is surrendered prematurely, there may be surrender charges and income tax implications.

There are other ways that life insurance can help benefit you and your beneficiaries. We can help you evaluate the role that life insurance could play in your overall financial situation.

1) Employee Benefit News, September 23, 2009
The information in this article is not intended as tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax or legal advice from an independent professional advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material was written and prepared by Emerald. © 2010 Emerald