Reviewing your Insurance

Tuesday, October 6th, 2009

Some people don’t have the habit of reviewing their life insurance policies.  But bear in mind that an insurance could be a vital part of your financial strategy or estate plan.

You can buy a life insurance policy and make your spouse or children as beneficiaries.  Business owners can also use a buy-sell agreement funded with an attached life insurance so that surviving owners may buy the company’s interest in case of a deceased partner.  In the same token, key-person insurance assures business aid when one of the core employees passes away.

However, there is a downside to this.  Life insurance proceeds form part of your taxable estate and your beneficiaries may be heavily taxed when you pass away.  One alternative around this law would be to allow your children or other beneficiaries to own your policy.  You can give gifts to your kids for the acquisition of the insurance - it’s like pooling their money and buying the policy for you.  Another way you can remove the proceeds of your life insurance from your taxable estate is to get irrevocable life insurance trust.

Life insurance can help you build wealth.  It can also be useful for employee benefits, business continuation, education planning, retirement planning, and estate planning.

Tags: beneficiary, business, estate, estate plan, Estate Planning, law, life insurance, policy, tax, trust, wealth
Posted in Estate Planning, Family Trust | No Comments »

Avoid Inheritance Tax on Proceeds of Life Insurance

Saturday, July 4th, 2009

Generally, life insurance proceeds aren’t subject to Indiana Inheritance Tax.  An exception to this rule occurs when proceeds are payable to the estate of the descendant, either because the estate was named as beneficiary or the deceased failed to name any beneficiary.

A few months ago, however, the list server of Indiana Probate Bar was actively discussing this fact - Indiana’s DOR (Department of Revenue) was taking expanded interoperation of the section in the code authorizing an inheritance tax on the proceeds of life insurance.

Apparently, DOR decided that if the life insurance proceeds are payable to one’s trust, then this trust is authorized to pay debts or administrative expenses of the decedent, and the proceeds would be subject to Inheritance Tax.

However, the code should not be interpreted that way.  The schedule B of Indiana Inheritance Tax Return - the only place that lists life insurance proceeds which says that “life insurance is payable to estate.”  Armed with this, many attorneys take the position that life insurance are not required to be filed on Inheritance Tax return and be subjected to Inheritance tax unless the proceeds are payable to one’s estate.

Tags: attorneys, DOR, estate, Indiana, inheritance tax, life insurance, proceeds
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An Amicable Senior Divorce

Wednesday, June 10th, 2009

These days, there is a growing divorce rate among seniors as people live longer. And when seniors divorce, they confront different problems compared to the younger ones. Younger couples usually focus on visitation and child support issues while these are some considerations for a senior divorce:

· Life Insurance – is there a policy?

· House – seniors usually have more home value than young couples. Sometimes, they even own more than one home.

· Retirement benefits – do the beneficiary need to be changed when one spouse has been relying on the other one’s retirement benefits?

· Health insurance – typically, one spouse is relying on the health insurance of the other.

Since these issues may be expensive to litigate and complicated to deal with, a mediator can help facilitate an amicable settlement and sort through these issues. They can also work them in a less contentious and cheaper way than bringing it to court. These mediators can meet with the couple and allow a discussion in a non-confrontational manner. The common goal is to address both spouses’ interest and produce an agreed settlement.

Remember that some attorney’s can also function as mediators. They may not necessarily bring the case to court if not needed. Once a mediated agreement has been signed, it only needs to be filed in court and is considered binding.

Tags: attorneys, Divorce, health insurance, house, life insurance, mediation, mediator, retirement benefits, Senior Divorce, seniors
Posted in Divorce, Senior Divorce | No Comments »