Life insurance is a contract between an individual and an insurance company. In this agreement, the company agrees to pay a predetermined sum of money, known as the death benefit, to the beneficiaries named in the policy upon the insured person’s death. The purpose of this payout is to replace the financial loss that would otherwise impact the beneficiaries due to the insured’s passing.

Most people start thinking about it when they get a full-time job and the human resources representative asks if they want to enroll in the employer’s group life insurance policy. They sign up, name a family member as the beneficiary of their policy, and then never give it another thought. Although it’s a solid starting point, it’s good to shift your perspective and recognize the true significance of life insurance.

There are numerous types of life insurance, and it can be well worth your time to become familiar with the primary varieties and know when to use them.

Which Type of Insurance is Best for Me?

1. Term insurance

Provides a death benefit to the insured’s beneficiaries in case of an untimely death, but only during a specified term or period. Let’s say the policy is for ten years, but the insured individual dies in the eleventh year, no death benefit will be paid to the beneficiaries. Because of this, term insurance is usually more affordable compared to other types of policies.

2. Whole life insurance

Has a fixed premium that remains the same throughout the entire contract and are generally more expensive than term insurances. The reason for this is that the insurance company sets aside a reserve to maintain the level premiums for the insured person’s lifetime. This reserve builds up as a cash value within the policy, which the policy owner can borrow against or cash out if they decide to end the policy before their death.

3. Universal life insurance

The amount of death benefits and cash value depends on various factors such as investments, expenses, and mortality rates that are included in the policy agreement. So, there is a bit of risk involved. This type of policy can offer higher death benefits and cash value over time, but if the underlying investments perform poorly and the cash value isn’t enough to cover expenses and costs, the policy may end.

4. Variable life insurance

It is similar to traditional whole life policies, but it gives the policy owner control over the types of investments underlying the policy. The cash value of the policy can be invested in stocks, bonds, real estate, and money market portfolios, allowing for potential growth. While the policy premiums are generally fixed, the cash value may fluctuate based on the performance of the underlying assets on a daily basis. Additionally, policyholders have the option to borrow a certain percentage of the policy’s cash value if they require cash for a specified period of time.

5. Variable Universal life insurance

A hybrid of variable life and universal life insurance, with many of the most desirable features of both types of insurance built into the contracts:

• flexible premiums
• adjustable death benefits
• control over the types of investments within the policy
• the ability to borrow against the cash value
• partial withdrawal rights

There are other types of unique life insurances that are suitable to different circumstances. Don’t hesitate to seek proper guidance. We can help you identify the right insurance policy to meet your specific need, and coordinate it with your estate plan. Insurance can be complex, but you don’t have to navigate it alone. Contact us today.

Making important decisions for yourself and ensuring the proper care of your assets after your passing can be overwhelming as a single individual. Who will step in to handle matters if you become unable to do so? Moreover, who will inherit your money and property when the time comes?

While your parents or siblings may seem like natural choices, factors such as their availability and the nature of your relationship with them can make them less suitable options.

If you don’t make a choice, the court will intervene and, in line with state law, appoint someone to make important decisions on your behalf.

To ensure your proper protection, it’s essential to consider a couple of things and make the necessary arrangements for your peace of mind.

1. Agent under a Financial Power of Attorney

In a financial power of attorney, the agent is the person who handles your financial tasks, like signing checks or opening a bank account, on your behalf. If you don’t have a family member or trusted friend to handle your finances, you can also hire professionals to provide assistance.

The financial power of attorney document specifies the agent’s authority, including the duration and extent of their responsibilities. It’s crucial to choose a responsible agent who can keep accurate records of the financial transactions they perform for you and has enough time to dedicate to the role.

2. Agent under a Medical Power of Attorney

Similar to a financial power of attorney, it’s important to have someone you trust to make medical decisions on your behalf. By creating a medical power of attorney, you get to choose this person instead of leaving it up to a judge.

It’s crucial to select someone who will respect your wishes and be available to make or communicate medical decisions for you. If you don’t have a trusted family member available, you can consider a close friend or a reliable professional. However, keep in mind that certain professionals, like doctors, may have limitations based on state laws.

3. Choosing the Right Beneficiaries

Without a designated beneficiary, your money and property will go to your estate, leading to the probate process and its associated costs and delays. This also applies to your life insurance policy and retirement account.

The best way to prevent this situation is through a comprehensive estate plan. It will ensure that your assets are distributed according to your wishes and avoid unnecessary complications.

4. Proper Tax Planning

When one spouse passes away, married couples can benefit from the estate tax marital deduction. This allows them to transfer money and property to the surviving spouse without incurring any taxes. Additionally, the surviving spouse can combine their own exemption amount with any unused portion of their deceased spouse’s exemption amount.

For single individuals, you only have a lifetime exemption, which is the amount of assets you can pass on without facing estate taxes ($11,700,000 in 2021). There’s also an annual exclusion amount ($15,000 in 2021) for gifts you can make each year without triggering gift taxes. If you have significant wealth, it’s important to consider tax planning earlier, as it may involve more complex strategies.

How estate planning can help singles

Singe individuals may encounter the issues above, but you can still take charge of your future and secure your legacy by creating an estate plan tailored to reflect your desires. You can provide clear instructions for how you want things to be handled during your lifetime and after your passing. Contact us today to discover how we can assist you in protecting your legacy.

As first responders, you are the heroes who put your lives on the line for us. Your bravery and dedication are truly appreciated. We recognize that your job can come with a lot of uncertainties and dangers. You spend your time coming to other people’s rescue, so it may be difficult for you to imagine a time when you might need help or rescue. However, such things happen to people every day.

So we want to help protect you and your loved ones from any potential emergencies by compiling a few things that you should consider:

1. Disability Insurance

Disability insurance can provide you with financial support when you can’t work due to an injury or disability. The amount of coverage you receive depends on the policy you choose. If you have disability insurance, you can rest assured that you and your loved ones will still receive an income to support yourselves during tough times.

If you don’t have disability insurance or feel like your current coverage is not enough, it may be a good idea to talk to an insurance agent who can help you review your needs and find the right policy.

2. Financial Power of Attorney

A financial power of attorney lets you choose someone you trust (an agent) to manage your finances for you, so you can focus on getting better. The agent can sign checks, open bank accounts, pay your bills, and anything similar. For peace of mind, you can specify what your agent can and can’t do to ensure that your financial affairs are in good hands.

Without a financial power of attorney, the court will need to step in and choose someone to manage your finances, which may not be the person you would have chosen.

3. Medical Power of Attorney

Similar to the financial power of attorney, a medical power of attorney allows you to choose an agent to make medical decisions for you if you’re unable to make them yourself. The agent will be your voice in important health matters and will communicate with doctors and other medical professionals on your behalf.

If you don’t have a medical power of attorney in place, a court may have to choose someone to make these decisions for you, and that person may not be the one you would have chosen.

4. Revocable Living Trust

A revocable living trust is a legal document that can help protect your loved ones and reduce court involvement. It allows you to appoint someone to manage your money and property in case you are unable to do so, which helps avoid the probate process.

The good thing about this trust is that you can still be in charge of managing your money and property while you’re alive. If you become unable to manage them, a backup trustee can take over without court involvement. You can also decide what will happen to the money and property in the trust after you pass away.

5. Advance Directive or Living Will

An advance directive, also called a living will in some states, is a legal document that lets you express your preferences about what medical treatment you would like to receive or NOT receive at the end of your life. This can make it easier for your loved ones to make medical decisions and prevent disagreements between them.

6. HIPAA authorization form

A Health Insurance Portability and Accountability Act (HIPAA) form allows you to give certain people access to your medical information, like updates on your condition or test results, without giving them the power to make decisions for you. This can help avoid conflicts between your chosen medical decision maker and other loved ones because they equally know the details about your condition.

Thank you for all you do!

You do so much to protect everyone else, and we want to take this opportunity to protect you. If you would like to discuss these items further or if you have additional questions, please contact us. We are available for in-person or virtual consultations, whichever is most convenient for you.

Navigating through bankruptcy can be a daunting experience. Once the dust settles, you may find yourself wondering what steps to take next. You may feel vulnerable and anxious about protecting your remaining assets, property, and most importantly, the well-being of yourself and your loved ones. That’s where an estate plan comes in as a guiding light to help you navigate through the uncertainty of the future. By creating an estate plan, you can ensure that your accounts and property are protected, and your loved ones are taken care of, even in the most challenging times.

Protecting Your Assets from Bankruptcy

After filing Chapter 7 or Chapter 13 bankruptcy, it’s likely that you have less money and property than you did before. But some of your assets were protected under federal or state law during the bankruptcy process, and they still have value. It’s important to create an estate plan that protects these remaining assets, and here are some key elements to include:

1. Last Will and Testament

A will is a legal document that allows you to plan for what happens to your property and belongings after you die. In the will, you choose someone to be in charge of handling your affairs and distributing your money and property to the people you want to receive them. However, if you only have a will and you pass away owning property or accounts in your name alone without a beneficiary designation, your loved ones will need to go through a legal process called probate to transfer ownership of those assets.

2. Revocable Living Trust

A revocable living trust is a legal document you create during your lifetime to manage your property. You are the trustee, and you can choose a co-trustee or successor trustee to take over if you can’t manage the trust yourself. You transfer ownership of your accounts and property to the trust and retain the ability to use and enjoy them. The trust agreement outlines how the trust property should be used during your life and after you die. Unlike a will, a revocable living trust avoids probate court. However, it does not protect your property from creditors. If you are considering creating a revocable living trust, make sure your bankruptcy proceeding is closed first. Transferring property or accounts during bankruptcy could be seen as fraudulent or voidable.

3. Beneficiary designations

After bankruptcy, you may still have certain accounts or policies, like life insurance or retirement accounts. It’s important to properly fill out the beneficiary designations for these accounts, so the money goes to the people you want it to. If you don’t fill out these forms, the money could end up going to your estate, which means your loved ones would have to go through the probate process. This can be expensive and time-consuming. Also, if your retirement account goes through probate, it could end up with unintended income tax consequences.

How Can Estate Planning Help During Bankruptcy?

An estate plan is not just for planning for what happens after death, but also for making plans in case you become unable to make decisions for yourself. This is called incapacity. It’s important to think about who you would want to make decisions for you in such a situation, such as medical decisions or financial decisions.

If you don’t have a legally enforceable document that specifies your choices, a judge will have to choose someone for you according to your state’s law, and this person may not be who you would have wanted. Here are some serious questions you should consider:

• Who will make financial decisions for you if you are unable?
• Who will make medical decisions for you if you are unable?
• What are your wishes regarding end-of-life care?
• What medical treatment do you want if you are diagnosed with a terminal illness or are in a persistent vegetative state?
• Who will care for your minor children?

We’re here to support you in moving forward by safeguarding your assets for you and your loved ones. Reach out to us so we can talk about creating a personalized estate plan that meets your specific goals.

You’re creating an estate plan, excitedly making arrangements for your loved ones to inherit your assets and carry on your legacy. But wait, what happens if you suddenly find yourself filing for bankruptcy? It may not be the most pleasant thing to think about, but it’s important to consider what would happen to your estate in this scenario.

With over half a million bankruptcy filings in 2020, it’s not an unlikely situation. And what if one of your beneficiaries is going through bankruptcy or may be in the future? These are crucial questions to address in your estate plan, even if bankruptcy seems like a distant possibility. Don’t leave your loved ones with uncertain futures – plan for the unexpected.

What happens to my estate if I am in bankruptcy when I die?

There are two types of bankruptcy that individuals usually file for: Chapter 7 and Chapter 13. If you pass away during a Chapter 7 bankruptcy, the bankruptcy trustee will sell your property, except for certain exempt items, to pay off your creditors. Once the bankruptcy case is concluded, any remaining property or money can be distributed to your beneficiaries according to your will.

In a Chapter 13 bankruptcy, you must actively participate in a repayment plan for several years. If you pass away during this time, your trustee and survivors must seek guidance from the court on what to do next. There are several options available, such as dismissing the case and allowing creditors to seek repayment through probate, converting the case to a Chapter 7 bankruptcy, or continuing the repayment plan with your heirs. Ultimately, the court will decide what is best for all parties involved.

If you want to protect your savings and property from potential future creditors, you can transfer them to an irrevocable trust. This means that you won’t be able to change the terms of the trust or get the property or money back easily. But the good news is that if you file for bankruptcy in the future, the property and money in the trust generally cannot be used to pay off your creditors. So your beneficiaries will still be able to receive the money and property you intended for them.

However, if you transfer money and property to avoid debt, this strategy won’t work. It’s important to implement this strategy proactively, before any financial problems arise that may lead to bankruptcy. If you transfer money and property within two years before filing for bankruptcy, the bankruptcy trustee may review the transfer and potentially undo it, making that property or money available to your creditors.

What happens if one of my beneficiaries is in bankruptcy when I die?

To prevent your hard-earned money and belongings from being used to pay off someone else’s debts, you can create a special kind of trust called a revocable living trust. When you do this, you transfer ownership of your money and property to the trust, but you still get to use and control them while you’re alive. This is important because it means that, even though the beneficiary of the trust technically owns the property, they can’t use it to pay off their debts because the trust can be changed or cancelled at any time before you die. This way, your money and property will be protected and won’t be taken away to pay for someone else’s financial troubles.

In addition, if you put your money and property in a trust and say that the person receiving it can’t control it or give it to someone else, then if that person goes bankrupt, the money in the trust can’t be taken to pay off their debts. After you die, the person receiving the money (the beneficiary) can get some of it as gifts from the trust, but only if the person in charge of the trust (the trustee) decides to give it to them. The trustee can only give them money for specific things like health, education, and living expenses. However, if the person receiving the money goes bankrupt and has already received money from the trust, that money might be taken to pay off their debts. This could happen up to 180 days after they file for bankruptcy.

Plan ahead today

No one can predict the future, and financial problems can happen to anyone. It’s important to take action now to protect your hard-earned assets and belongings, even if you’re not facing bankruptcy or financial difficulties yet. By creating an estate plan, you can safeguard your property and money, and ensure that your loved ones receive their inheritances as you intended.

Our team can help you design an estate plan that protects your property from creditors, regardless of your financial situation. Contact us today to start creating or updating your estate plan.

With love comes responsibility, and one of those responsibilities is managing your finances as a couple. You both have your own individual accounts and properties, but you also have shared assets that you’ve acquired together. The question then becomes, what happens to all of these accounts and properties when one or both of you pass away?

The answer is not an easy one, but fear not, because there is a unique estate planning tool that can help alleviate some of the stress that comes with making such decisions. It’s called the pour-over trust, and it’s specifically designed for married couples who think about their accounts and property as “yours, mine, and ours.”

What is a joint pour-over trust?

A type of trust that holds your and your spouse’s joint property. You can create this trust together and name yourselves as the current trustees. When one of you passes away, half of the joint trust’s accounts and property is distributed to the deceased spouse’s separate trust, and the other half is distributed to the surviving spouse’s separate trust.

To make sure everything goes according to your plan, you may need to create three trusts – the joint pour-over trust and one separate trust for each spouse. Jointly owned property goes into the joint pour-over trust, while separately owned property goes into each spouse’s separate trust. This allows you to provide different instructions for handling jointly and separately owned accounts and property.

Once the first spouse passes away, the joint pour-over trust has no more work to do, and it won’t require ongoing administration. This makes it an efficient estate planning tool for couples who want to simplify the process of managing and distributing their assets.

What are some other benefits of a joint pour-over trust?

Ease in trust funding and administration

A joint pour-over trust is a trust that you and your spouse can use to manage your shared accounts and property. It’s helpful because both of you can control it, and you can easily transfer your joint assets into it.

Avoids probate

Avoiding probate is a common reason why people consider creating a trust-based estate plan. If you and your spouse put your joint accounts and property into a trust, it can help your loved ones avoid probate in the event that you both pass away at the same time. Your chosen backup trustee can carry out the instructions without court supervision.

Keep things separate

If you and your spouse have joint accounts and property, putting them into a joint pour-over trust can help keep them separate from your individual accounts and property. This makes it easier to manage your assets according to your wishes. However, it’s important to consider whether putting all of your accounts and property into a joint trust is the right choice for you. If some accounts or property have already been handled separately, combining them in a joint trust could make things more complicated and go against your wishes. It’s important to think through the pros and cons and make the decision that’s best for you and your family.

We can help

Just because you and your spouse have both joint and separate accounts and property doesn’t mean that you can’t plan for how those assets will be distributed after your death. By working together, we can evaluate all of your accounts and property and discuss your wishes for how they should be handled. We can then create an estate plan that takes into account your specific circumstances and ensures that your assets are distributed according to your wishes.

Reach out to us today and we can create a plan that works best for you, your spouse, and the rest of your loved ones.