Originally Posted by Great Expectations:
This is definitely the smartes way to do it; now you just need a trust to help with potential future tax liabilities.
Originally Posted by lewdog:
Yes, getting one in place for our assets next year. Can get lawyer services from work for $20/month and it includes trust and will writing. Already have living Will but do need the trust.
What tax? Estate taxes? Federal estate tax threshold is $5.6 million so it's alot of cheddar before you need to worry about structuring your estate plan around tax issues. A brief bit of online research suggestst hat Missouri has no estate tax, though if you're in another state your mileage may vary.
Obviously, good estate planning can be critical for many other reasons, but unless you have pretty serious coin, estate taxes isn't likely to be a key driver. [Reply]
Originally Posted by Amnorix:
What tax? Estate taxes? Federal estate tax threshold is $5.6 million so it's alot of cheddar before you need to worry about structuring your estate plan around tax issues. A brief bit of online research suggestst hat Missouri has no estate tax, though if you're in another state your mileage may vary.
Obviously, good estate planning can be critical for many other reasons, but unless you have pretty serious coin, estate taxes isn't likely to be a key driver.
Good point on the taxes. Avoiding any court concerns/probate is probably the best reason for the trust. Having the trust own real estate and life insurance policies make a smoother transition than a living will, but most living wills are actually trusts now.
Besides that unless you don’t have the discipline or can’t automatically have your 401k money taken out of your paycheck I don’t see why you’d want a whole life policy.
That said, if you make too much money to invest in a Roth can you buy a whole life policy that is effectively a Roth? Maybe have the death benefit a negligible number and put a lot of money into the whole life policy?? [Reply]
I do kinda like, now, that my policy could pay for itself and keep going indefinitely (dividends/interest equals the premium pretty much) and that whenever I do pass the entire cash value will be there plus the death benefit.
READ YOUR POLICY
This is where I decided not to do it.
The way it was neatly laid out in columns of numbers by the salesman I thought, "Oh, I will have all this cash to draw from in my later years, and still have $500,000 to leave my kids when I die, because the thing is paying for itself at this point"
NOPE
THE CASH VALUE IS THE CASH VALUE OF THE DEATH BENEFIT. Meaning, once you start to draw on the cash value (say you want to pull $40K a year out to supplement your retirement or $20K each year to go on a two-month trip.) that amount is deducted from your death benefit.
Once you pull a bit from your cash value, not only does the death benefit go down, the dividends go down and you have to start paying the premiums again, as the dividends are no longer enough to cover the payments.
That was never explicitly explained to me by the guy and I tried to remain as polite as possible (it was hard) when I told him we weren't going with any of his recommendations.
PLUS, the proposed policy had a $450,000 Long Term care rider, meaning if one of us needed long term care, we could get $9000 a month for that for up to 50 months. Again, I asked questions ,ran some scenarios by him and he told me that the Long term care money would be withdrawn from the death benefit as well!
So, it felt like additional coverage when in fact it was sold like the but really just re-naming activating the cash withdrawal or depletion of the death benefit.
After this was all clear to me, and I was rejecting him he started to say "well nothing is for free, these companies can't stay in business by giving you $950K for a $250 K investment."
Amnorix, you have a death benefit now, and your assertion may be right that if you had chosen term and invested the rest you might be better off, but you have no idea what you would have put that into. Or if you would have forced yourself to invest that much all those years.
Be happy that you have a death benefit and lump sum to pull from but you don't have both -- at least my policy didn't. Check yours. I wouldn't want you to think you have both and come find out years from now what I learned asking all these questions and running multiple scenarios past the guy. [Reply]
Whole life typically pays the agent the largest commission of any product they can sell. There usually isn’t anything that generates more money for the insurance company than whole life. [Reply]
Originally Posted by Amnorix:
What tax? Estate taxes? Federal estate tax threshold is $5.6 million so it's alot of cheddar before you need to worry about structuring your estate plan around tax issues. A brief bit of online research suggestst hat Missouri has no estate tax, though if you're in another state your mileage may vary.
Obviously, good estate planning can be critical for many other reasons, but unless you have pretty serious coin, estate taxes isn't likely to be a key driver.
Originally Posted by displacedinMN:
Also put everything in a trust.
Interestingly, I'm working up my will and estate plan right now (yeah, I procrastinated), and the attorney said that in Colorado it's not necessary to do a trust. Apparently we have pretty straightforward estate laws so a simple will works well. I was surprised since I'd planned on doing a trust and having the various annoyances that come with setting it up. [Reply]
A trust allows you to control your assets from the grave. If you have a complicated life (multiple divorces/kids, tons of money, kid with needs etc), you should have a trust (make sure you fund it). It also avoids probate thus private.
Everyone should have a will and powers of attorney (health DNR, financial)
When discussing your will, ask if you should have a trust as well. [Reply]
The way it was neatly laid out in columns of numbers by the salesman I thought, "Oh, I will have all this cash to draw from in my later years, and still have $500,000 to leave my kids when I die, because the thing is paying for itself at this point"
NOPE
THE CASH VALUE IS THE CASH VALUE OF THE DEATH BENEFIT. Meaning, once you start to draw on the cash value (say you want to pull $40K a year out to supplement your retirement or $20K each year to go on a two-month trip.) that amount is deducted from your death benefit.
Once you pull a bit from your cash value, not only does the death benefit go down, the dividends go down and you have to start paying the premiums again, as the dividends are no longer enough to cover the payments.
That was never explicitly explained to me by the guy and I tried to remain as polite as possible (it was hard) when I told him we weren't going with any of his recommendations.
PLUS, the proposed policy had a $450,000 Long Term care rider, meaning if one of us needed long term care, we could get $9000 a month for that for up to 50 months. Again, I asked questions ,ran some scenarios by him and he told me that the Long term care money would be withdrawn from the death benefit as well!
So, it felt like additional coverage when in fact it was sold like the but really just re-naming activating the cash withdrawal or depletion of the death benefit.
After this was all clear to me, and I was rejecting him he started to say "well nothing is for free, these companies can't stay in business by giving you $950K for a $250 K investment."
Amnorix, you have a death benefit now, and your assertion may be right that if you had chosen term and invested the rest you might be better off, but you have no idea what you would have put that into. Or if you would have forced yourself to invest that much all those years.
Be happy that you have a death benefit and lump sum to pull from but you don't have both -- at least my policy didn't. Check yours. I wouldn't want you to think you have both and come find out years from now what I learned asking all these questions and running multiple scenarios past the guy.
Agreed all around. The death benefit is the cash value plus the guaranteed death benefit. You can withdraw the cash value at any time, but obviously that reduces the amount of the death benefit you get. You could zero out the cash value, leaving only the guaranteed death benefit.
And I also agree that the cash value is what is producing the income that could potentially cover the premium. In my case, the annual dividend/interest (however it is categorized) is approximately equal to the annual premium, which means that if I apply the income to the premium, (1) I don't have to pay the premium out of pocket, and (2) the cash value is not reducing (just not growing) and (3) therefore, the death benefit is not reducing (just not growing).
Of course, the annual income is not -- to my knowledge -- fixed, so in a down economy that amount could be less, and insufficient to cover the premium, meaning that I would either need to come out of pocket to cover the premium, or let the cash value reduce.
Hopefully this all makes sense. Hopefully I have all this RIGHT!! [Reply]
Originally Posted by Rain Man:
Interestingly, I'm working up my will and estate plan right now (yeah, I procrastinated), and the attorney said that in Colorado it's not necessary to do a trust. Apparently we have pretty straightforward estate laws so a simple will works well. I was surprised since I'd planned on doing a trust and having the various annoyances that come with setting it up.
Nobody needs to do a trust. Advantages to a trust depending on circumstances:
1. no probate, which means no public filings, revealing the amount of the assets transferred.
2. smoother/quicker transfer of assets. Nothing "hung up" in probate.
3. potential tax advantages (highly dependent on your level of wealth and type of trust). See GRATs for significant evidence of this.
4. potential to put your assets beyond the reach of the state government in the event of end of life medical expenses under Medicare/Medicaid. More on this below.
So in Massachusetts, Medicare/Medicaid (I can never remember which) will cover your nursing home costs (think $10,000/month or whatever) if you are basically impoverished (the old rule was $2,000 or less in assets). If you have more than that, and need to go into a nursing home, then you will be required to spend down your assets until you reach that threshold, at which point the state starts to pay.
So it is common for older people to place the majority of their wealth in a trust as this kind of expense will break all but the most wealthy of people, effectively disinheriting their kids. If the property is in a trust, then it is not the trust res (corpus, actual assets, as opposed to income) is beyond the reach of the state and cannot be applied to these nursing home costs. In Massachusetts, however, there is a five year look-back period, allowing the state to claw back assets placed into trust less than five years prior to whatever the trigger date is (institutionalization, or the date Medicaid started to cover the cost, or whatever).
All this gets tricky/sophisticated, but if you care about preserving your assets in an end-of-life situation where a nursing home can easily eat five figures per month of your life savings, then you should have this in mind.
30 seconds of research suggests this might be a worthwhile website for you to review:
Oh, and good advice: tell your wife to forget about useless life insurance and think about long term care insurance and/or disability insurance
The path to poverty for the upper middle class/lower upper class is disability/invalidity/serious health issues. It stunts or eliminates income while driving costs through the roof for potentially protracted periods of time. [Reply]
Originally Posted by Amnorix:
Nobody needs to do a trust. Advantages to a trust depending on circumstances:
1. no probate, which means no public filings, revealing the amount of the assets transferred.
2. smoother/quicker transfer of assets. Nothing "hung up" in probate.
3. potential tax advantages (highly dependent on your level of wealth and type of trust). See GRATs for significant evidence of this.
4. potential to put your assets beyond the reach of the state government in the event of end of life medical expenses under Medicare/Medicaid. More on this below.
So in Massachusetts, Medicare/Medicaid (I can never remember which) will cover your nursing home costs (think $10,000/month or whatever) if you are basically impoverished (the old rule was $2,000 or less in assets). If you have more than that, and need to go into a nursing home, then you will be required to spend down your assets until you reach that threshold, at which point the state starts to pay.
So it is common for older people to place the majority of their wealth in a trust as this kind of expense will break all but the most wealthy of people, effectively disinheriting their kids. If the property is in a trust, then it is not the trust res (corpus, actual assets, as opposed to income) is beyond the reach of the state and cannot be applied to these nursing home costs. In Massachusetts, however, there is a five year look-back period, allowing the state to claw back assets placed into trust less than five years prior to whatever the trigger date is (institutionalization, or the date Medicaid started to cover the cost, or whatever).
All this gets tricky/sophisticated, but if you care about preserving your assets in an end-of-life situation where a nursing home can easily eat five figures per month of your life savings, then you should have this in mind.
30 seconds of research suggests this might be a worthwhile website for you to review:
Oh, and good advice: tell your wife to forget about useless life insurance and think about long term care insurance and/or disability insurance
The path to poverty for the upper middle class/lower upper class is disability/invalidity/serious health issues. It stunts or eliminates income while driving costs through the roof for potentially protracted periods of time.
I was told in AZ a trust does a variety of things. We are 33 years old and just had a kid so delineating assets, in case of death is on my mind with a child involved now.
1. It avoids probate which can take years? Is years really true?
-It also avoids probate fees which can be 5% of assets!
2. It limits who has access, can claim access and how much of your assets they can acquire at one time if needed.
3. Would delineate a set amount to be given to children, if both parents die, so your child doesn't blow through their entire inheritance. [Reply]
US, China reach 90-day ceasefire on tariffs in trade dispute
Originally Posted by :
BUENOS AIRES, Argentina (AP) — The United States and China reached a 90-day ceasefire in a trade dispute that has rattled financial markets and threatened world economic growth. The breakthrough came after a dinner meeting Saturday between President Donald Trump and Chinese leader Xi Jinping at the Group of 20 summit in Buenos Aires.
Trump agreed to hold off on plans to raise tariffs Jan. 1 on $200 billion in Chinese goods. The Chinese agreed to buy a “not yet agreed upon, but very substantial amount of agricultural, energy, industrial” and other products from the United States to reduce America’s huge trade deficit with China, the White House said.
The truce buys time for the two countries to work out their differences in a dispute over Beijing’s aggressive drive to supplant U.S. technological dominance.