Andrew Ewalt's Law Blog

Life Insurance: Providing Certainty To An Uncertain Time

Once you have updated your will and executed a health-care power of attorney and durable power of attorney you must determine if you have enough life insurance.

One of the worst mistakes a person can make is underestimating the amount of money their families will need if the primary earner in the family should die unexpectedly.  The bottom line is not to skimp on life insurance, especially young families who may need the financial help for many years.

When considering insurance there are basically two types –Term and Permanent.

Term life insurance expires after a certain number of years, can be attractive because it is typically less expensive and when coverage is only needed for a predetermined period.  However, when the term expires, renewing may be very expensive. 

Permanent insurance can be more expensive but is often the better choice where there is a long-term need for coverage.  Typically, permanent life insurance builds up a cash value over time, which is different from term, which has no cash value.

It is very important to speak with a knowledgeable and qualified insurance professional who can provide you with an in-depth assessment of your financial needs and your long-term objectives regarding the need for life insurance. 

We would be happy to help you find an insurance professional.  Please contact our office for a great referral. 

Reasons To Have A Living Trust

Here are some reasons to have a Living Trust instead of a Will

§  A revocable living trust is private while probating a will is public.

§  Living trusts are easy to make and maintain

§  You can give what you own to whom you want and when you want   subsequent to your death through the use of a revocable living trust.

§  A revocable living trust can control, coordinate, and distribute all your property interests while you are alive as well as on your death.

§  By using a revocable living trust, you can arrange for your well-being under your terms as you advance in years, become ill, or become mentally incompetent.

§  The use of a revocable living trust assures that your plans and affairs will remain private, rather than being made public, on your death or incapacity.

§  It is not difficult for you to change or amend your revocable living trust at any time during your lifetime.

§  There are no adverse lifetime income tax consequences that result form the use of a revocable living trust.

§  Property that has been placed in a revocable living trust during your lifetime is not subject to and does not pass through the probate process on your death; it is probate free.

§  Opportunities of gift and estate tax planning available through will planning are equally available through the use of a revocable living trust.

§  Continuity of cash flow and investments in your portfolio can continue uninterrupted by your death.

§  Revocable living trusts are legal in every state.  Your trust can easily be moved with you as you cross state lines.

§  By using a revocable living trust, you can measure your post death trustees’ abilities to manage your assets while you are alive.

§  Revocable living trusts are more difficult to attack in court, and usually less successfully attacked, by disgruntled beneficiaries than are wills.

Tips To Avoid A Tax Audit

Its tax time again. Both individuals and businesses can be subject to the dreaded IRS audit.  Statistical only about 1.5% of all tax returns are audited each year. Here are some quick tips that might help reduce your chances of being audited (Note: These tips are not in any way a replacement for the advice of a qualified tax prepared. If you are concerned about an audit seek out the advice of your tax preparer or attorney.)

1.  Report all income

2.  Have proper documentation available

3.  Check your return for math errors

4.  If married file jointly

5.  Sign and file your return

6.  Be certain your personal information is correct

7.  Keep track of large money transfers

8.  Use deductions only when appropriate

Cost of Life Insurance

According to the Insurance Information Institute, Individual Life insurance should cost less this year.  The reason is people are living longer, so mortality charges are lower, plus competition helps keep prices down.  Here are some tips for keep insurance on your life even lower:

1. Quit smoking.  Nonsmokers pay lower life insurance premiums.

2. Younger folks should consider term insurance (keep in mind this form of insurance has no "cash value" or savings aspect like with other permanent insurance)

3.  Overall health.  If you can get your insurance company to qualify you as a preferred risk (meaning your health is very good and you are at a low risk for dying), you can save up to 50 percent on premiums.

4.  Shopping low numbers on policies.  Consider what your goals for the insurance are.  If you are concerned about the final death benefit consider the Net Payment Cost Index and compare those prices between policies.  If you  expect to surrender the policy and hope to take its cash value consider the Surrender Cost Index and compare those prices between policies.

Special Needs Planning Part 2

A very important element of any estate plan, but especially so when planning for a special needs child is a letter of intent.  The letter of intent is a written document, created by the parents of a spacial needs child that serves as a blueprint of valuable information about the child.  It should provide a clear vision of how parents want their child to live when they are no longer able to care for the child.  The letter should answer the questions:  What will happen to our child when we can no longer provide daily care, supervision and financial support? However, this is not a legal document, and does not replace the parents special needs estate planning documents, but acts as a supplement to those legal document.

The letter of intent generally includes information about:

1.  Emergency contacts

2.  Behavioral condition and history

3.  Medical condition and history

4.  Current and desired living arrangement

5.  Financial Status

6.   School or work situation

7.  Funeral arrangement

8.  Parents feelings about the child's future

9.  Insurance

10.  Education