Tag: Estate

Do retirees need life insurance?

People who have been paying life insurance premiums for many years are reluctant to stop.  But often the need for a death benefit is gone once the kids are grown and there is enough money for the couple to live comfortably for the rest of their lives.

Keep in mind that the reason for purchasing life insurance in the first place is to protect the bread-winner and make it possible for the surviving spouse to put the kids through college. Since these factors are no longer in play once they retire, we have to ask out clients to reconsider whether the additional expense is still warranted.  This is especially true if the insurance is a term policy which often gets more expensive a people age.

Canceling one’s coverage shouldn’t be a casual decision. In some instances, clients have already paid a great deal of money into these policies, and given their advanced years will never be able to obtain another one for the same rate. So before dropping the coverage, people should think long and hard about any possible implications.

In any case, if you have life insurance policies it’s wise to review them on a regular basis, make sure that the beneficiaries are the ones you want to receive the proceeds and check the tax implications of policies outside of irrevocable life insurance trusts.

If you have questions, ask your financial advisor.

10 Biggest Estate Planning Mistakes

From Financial Planning Magazine

1. Procrastination

While some of us would like to think to think we’re immortal, the time will come where all of us will have to eventually meet our maker. That’s why it’s important for advisors to push their clients to have their own estate plan, before it’s too late, and state laws intervene by creating one for them.

2. DIY Mentality

While a “do-it-yourself” mentality is admirable, it is often wise for clients to seek a professional advisor or lawyer when treading the murky waters of estate planning.

3. Failure to Think From all Angles

Sometimes clients get too invested in a particular planning approach, and forget to look at the big picture. While advisors should offer solutions to clients, they should also provide clients with “what-if” scenarios, so that they are fully prepared for what might go wrong.

4. Divorce

Often clients do not take into the account that they might get divorced. As a contingency, clients can place restrictions on the money in the trust being distributed outside of the family. Or they could use a discretionary distribution standard which gives discretion to the trustees.

5. Missing the Fine Print

As with any other legal document, the fine print in estate planning documents can be the difference between retirement in the Bahamas or in a trailer home. To avoid being manipulated by the fine print, make sure the client and estate planning attorney has dotted every “i” and crossed every “t.”

6. Forgetting Pets

Sometimes, clients forget to consider pets, and so when they die, their pets often have to follow them to their grave. Set up a pet trust to care for animals after the client dies.

7. Failure to Update ALL Documents

Failure to update or title clients’ other documents may prove to erase any benefits estate planning documents might have to offer. Make sure the client re-titles the assets in the name of the trust, not themselves, for clarity. And check regularly to ensure that beneficiary designations on all retirement documents are up-to-date. (You might not want that $1 million to go to your ex-wife anymore)

8. Underestimating Trusts

Some clients assume that trusts are only for minor children. In actuality, trusts are asset protection vehicles for the entire family, and can protect the assets from the claims of creditors.

9. Failure to Consider Digital Assets

When a client dies, their spouse/ heirs may not have access to the password for digital assets. As a result, there’s value that they can’t get to. To prevent this, make sure clients have a list of all their online user names/ passwords, and that the appropriate family member or trustee has access to the information.

10. No passing on of Digital Libraries & Music Collections (Yet)

As of the writing of this, clients cannot pass down to heirs their digital libraries and music collections, due to terms of service of the major sellers of digital content. While this may change in the future, clients will just have to accept this fact for now.

Connect With Us

Korving & Company, Investment Management, Suffolk, VA

Contact Us

Newsletter Signup

© 2021 Korving & Company, LLC