Greetings!
By now you have read these newsletters and been inspired to complete your estate planning documents. You have signed your living trust, your Will and even your Advanced Health Care Directive. You have built a good structure, the foundation is solid, the roof is on, the house is liveable and that building process was long and complex. So, you ask, "Haven't I completed my estate planning?"
I answer, "As important as your estate planning documents are, there is more to estate planning than signing the Trust Agreement, Will and accompanying documents." The building needs to go on. You don't want the windows to fall out later. The chimney may need shoring up. "OH, NO!" you say, "Not something more!" Even if there is nothing more you actually need to do, you at least need to consider insurance. You may in fact be self-insured or not need any of the kinds of insurance discussed in this newsletter for any of a number of reasons but you don't want to want/need them later and then be unable to obtain them because they have become too expensive, because you have obtained an advanced age, because your health is less than ideal, and so on. Building a complete estate plan is no easy task. The goal is, in part, to protect your estate and the financial well being of your loved ones. Often this is particularly true if you have minor children or other people whom you support. As you read on and consider the information in connection with your estate plan, please understand that neither I nor anyone in this firm profit in any way from your buying any kind of insurance. Also, please do not dismiss this information because of any other extraneous reason. |
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Life Insurance
A life insurance agent could tell you about many different products that are or function as Life Insurance. Here I want to only mention two purposes you might have that could be fulfilled if your life is insured.
(1) Estate Taxes: If you own an estate subject to estate tax which is worth more than $5 million and (a) you are single or (b) you are married and the federal government does not recognize the legitimacy of your marriage YET, chances are that your estate will need cash to pay estate taxes. If you are in a marriage that the federal government does recognize as legitimate and the value of the estate you and your spouse own is worth more than $10 million, your estate will be taxable.
You might buy life insurance to cover the amount of such taxes. This would be particularly advantageous if for some reason your assets were illiquid and could not or should not be sold to pay the estate taxes. Think: house, 401(k), stock or partnership interest in a family business. (2) Living Expenses: If your income is necessary for the support of loved ones (your mother, for instance, or of course, your children who are minors or substantially disabled) or if that may be true in the future, you could buy life insurance now while you are young and healthy and it is cheap. The life insurance could be in trust or not, and used to pay living expenses for the time period the support is needed. If you are not so young but are/will be an important source of support, you still might buy it NOW because you are only going to get older (I guess your knew that) and the products are going to be concomitantly more expensive. |
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Disability Insurance
If you need life insurance to replace the support your earnings are providing for yourself and one or more loved ones, how much more do you need disability insurance? After all once you are dead and buried you generate virtually no expenses. If, however, you are so disabled that you cannot generate earnings to cover the support of whomever you supported before the disability and yourself, what will you do?
This is as bad as a hurricane. A lot of rebuilding will have to go on. I know that this idea is extremely difficult to look at but it is a really good idea to think concretely about these Problems: (1) How you would support yourself; (2) How you would support those who count on your support because they cannot support themselves; (3) How you would pay for rehab and care for yourself; (4) What you would do if your health insurance were terminated and you had to pay for your medical expenses.
At this point, the Golden Gate Bridge is not an option for any number of reasons, like it doesn't provide support for the loved ones (and, oh yes, you are disabled so maybe you can't get there).
You might want to think about disability insurance that you buy (in addition to or because of lack of state disability or disability insurance provided by your employer) especially if you are self employed. Buy enough. Buy all you can afford. It is terrible to be disabled from doing the work you want to do but to be "hurting for money" as well and to see your loved ones go wanting, cannot be the future you want. If the roof is blown away, you want to be able to build a new one.
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Long Term Care Insurance
Long Term Care Insurance will give you money to hire someone to take care of you if you cannot take care of yourself.
Some people say it is too expensive, not necessary, not something they want to buy. I grant that buying insurance is not a fun way to spend money and with luck although you spend money on the insurance, you will get nothing tangible in return. You have probably bought a number of different insurance policies without getting a penny back. But if your house caught fire, wouldn't you be glad to have insurance in place.
While the chances of there being a fire in your home are probably small (don't smoke in bed), the chances of your needing to be taken care of at some point in your life is pretty high. You might only need the care for a reasonable period of time (while undergoing chemotherapy, for instance) and then return to full functioning. Or you might need to hire someone to care for you in the last stages of your life. In both cases having some money to pay for the caretaker could be wonderful.
Long term care insurance can be expensive, but you can determine the features of the policy you want to purchase. The features are largely determinative of the price. You no more buy long term care insurance without looking at and choosing the features of the policy than you buy "a house" as a generic product.
Some of the features you will look at, as they contribute to the cost of the policy, are: How long you can self-insure before you want to have the policy start paying benefits (this is the waiting period), how much money you want to receive to pay your caretaker, how much those benefits grow over time in relation to inflation, how long you want benefits to last.
Just as you would design your house, you need to design your long term care policy. Of course to do this, you will work with an expert in this kind of insurance. It would be unusual to hire your yoga teacher to design your kitchen, it would be unwise to buy this kind of insurance from an agent who does not regularly sell it; even if that agent is the first cousin of your neighbor's best friend.
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Contact Us for More Information
If you want to discuss any issue raised in this newsletter, please give us a call. Also, if you need a referral to an agent, call us. We can put you in touch with a highly professional agent who knows how to help you to determine your needs.
Sincerely,
Julia P. Wald
The Law Offices of Julia Wald
415.482.7555
www.waldlawyers.com |
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The photographs in this newsletter are construction and building images taken by Julia Wald on her personal adventures.
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