Keeping insurance in force in the event of disability


A sudden disability, whether from illness or injury, causes a tremendous upheaval for the individual’s family. Their days are suddenly filled with medical concerns, consultations with doctors, hospital visits, and the like. In addition, there are major financial disruptions. The disabled person is no longer working, and the loss of a paycheck can create significant financial problems for those who are dependent upon him.

In the middle of such a crisis, routine things can be easily overlooked. One thing that is vitally necessary under these trying circumstances is to keep up with premiums on the individual’s policies of disability insurance and life insurance. The family may not immediately recognize that premiums are due, and failing to pay the premiums can result in the loss of significant protection. We have encountered a number of cases in which a policy which had been in place for years was suddenly not available because the most recent one or two premiums had not been paid during the course of the insured’s major illness.

Further, an early oversight can create a major problem when it comes to restoring coverage. Many policies have a “grace period”, under which an overdue premium may be paid and avoid a lapse in coverage, keeping the policy in force. If the policy does not include a grace period, or if the grace period expires, the individual will very likely not be eligible for reinstatement because he now has a significant medical problem.

If a family member becomes suddenly disabled, consider taking the following steps:

  • Go through his or her papers, checkbook, etc. to find policies, business cards of agents, or records of payments to insurance companies.
  • Contact the agent to find out the details of the policy and when premiums are due.
  • Contact the employer to get details of employer-provided or -sponsored coverage. Such coverage may well cease on termination of employment, but many policies can be converted to an individual policy.
  • Most importantly, keep the premiums paid so that the policy will continue in force.

A little attention to these details early on can prevent a number of unwanted rejections in the future.


Duck! President Obama’s Do-Nothing Approach to Estate Tax Exemption Levels


Despite the often-reported claim that President Obama and Democratic congressional leaders would move quickly to block the estate tax from disappearing in 2010, they did nothing. Thus, the tax-cut package enacted under President George W. Bush, which provides for the estate tax to be repealed for fiscal year 2010 – – October 1, 2009 to September 30, 2010, remains in force.

Harken back to the campaign trail, when Senator Obama was running for president. Under his plan as detailed during the presidential campaign, the estate tax would be locked in permanently at the rate and exemption levels of 2009. That would exempt estates of $3.5 million (or $7 million for couples) from taxation. The value of estates above that would be taxed at 45%.

However, President Obama’s plan was not implemented. Indeed, no plan was implemented. Could it be that, in fact, President Obama’s plan all along was to do nothing? By doing nothing, President Obama effectively raises taxes, and all the while can stand up and say this is the result of the plan implemented by President Bush. Under President Bush’s plan, the estate tax was completely repealed for 2010, and then returned to Clinton-era levels in 2011, where the exemption amount is only $1 million ($2 million for couples) and the value of estates above that are taxed at 55%.

As times continues to tick, it is becoming more apparent that nothing will be done.  Many people claim our federal government is spending like never before.  It is not too difficult to imagine the government will look to a lower exemption level as a way of collecting more taxes to pay for this spending.  This is a very good time to contact clients to discuss revising their estate plans, especially for married couples who may soon find themselves in need of a credit/shelter trust.

Who Will Care For My Pet When I Am Gone?


For many of us, pets are valued members of our families. They often serve as companions and friends to the elderly. In fact, many elderly people will spend more time with their pets than they ever do with their children. Given that, it is natural that people want to provide for their pets after their death. Fortunately, Michigan is one of thirty-three states that recognizes pet trusts as valid and enforceable. A pet trust can be established to provide for the ongoing care of your pet, after your death.

What Should I Leave My Pet?

When you are planning your succession, how do you set up a trust for your pet? The first thing you will want to do is meet with your estate planning attorney to discuss your options. There are many things you will want to consider. Perhaps at the top of the list is how much property or assets you want to leave your pet and/or how much the pet will need. If you have specific desires about how your pet is cared for and the standard of living, you will want those expressed in writing. If you intend that your pet have a live-in caretaker at your place of residence and eat only organic, home-cooked food, you might need to set aside more funds than someone who simply wants a caretaker.

Choose A Caretaker And Trustee

You will need to choose a caretaker and a trustee for your pet trust. This can be the same person or two different people. Your caretaker is responsible for the actual care of your pet and has standing to enforce your pet trust if your trustee does not follow the directions in your trust. Your trustee is responsible for managing the funds of your trust and distributing those funds in accordance with your wishes to the caretaker for your pet’s care. The caretaker and trustee need to be someone you trust to carry out your wishes for your pet. You should name alternate caretakers and alternate trustees, in case those you have first appointed are unable to serve in their appointed roles.

Additional Payments To Caretaker And Trustee?

You need to decide if you want any additional payments made to your caretaker and trustee in consideration of the services they are providing. This may not be a viable option for you depending on the size of your estate, but if you have significant assets you may generate more goodwill toward your pet by providing a little something for the caretaker and trustee that are responsible for your pet.

Identify Your Pet

Attempt to clearly identify the pet(s) that is the beneficiary of the pet trust. This will help prevent possible fraud on the part of your caretaker who may “replace” your pet when he dies because she wants to continue receiving payments. A written description, picture, and veterinarian records are all helpful in identifying the pet. A more advanced method would be to place a microchip implant in the pet and retain a DNA sample. However, if your intent is that your pet trust provide for whatever pets you have at the time of your death (instead of naming a specific pet), a more generic description of your pets as a class may have to suffice. If you are naming trusted family members to care for the pet who share your love for the pet, you may not be as concerned about specifically identifying your pet.

Minimize The Risk Of Your Pet Trust Being Challenged

You will want to minimize the risk of your pet trust being challenged by your heirs. While your pet trust is valid, that might not stop your heirs from challenging it. If you are leaving a substantial part of your estate to your pet, consider putting your reasons in writing. Describe the standard of living for your pet, the benefit you have received during the years you have had together, and your desire to adequately provide for your pet. Consider capping the amount you will give to your pet trust by a percentage of the estate. For example, you will give X amount of dollars to your pet trust, not to exceed 25% of your estate. If you give everything to your pet and disinherit your children without stating why, you certainly run the risk your children may challenge your mental competency and attempt to have your pet trust undone.

How Will Your Caretaker Receive Distributions?

Designate how your caretaker will receive the funds from your pet trust. You can direct that your trustee pay the caretaker monthly or quarterly, for example. Determine if you will establish a set amount every month regardless of the caretaker’s actual expenses or if you want the caretaker to receive additional payments for above-normal expenses, such as medical or veterinarian expenses. You could have your caretaker submit receipts for reimbursement to the trustee, but that places a burden on the caretaker to keep detailed records of all costs.

Final Considerations

You must designate a remainder beneficiary if you want to avoid the court getting involved in the final distribution of your trust after your pet’s death. Who do you want to receive any leftover or remaining money in the trust when your pet dies? If you leave it to the caretaker or trustee they may have an incentive to see that your pet meets an earlier death. Consider leaving the remainder to your favorite charity. You should also provide instructions for where your pet should be buried or cremated.

For more information about this subjet visit this link.


Why estate planning?

Succession planning

“I’m not Warren Buffett. I’m not even Jimmy Buffett. I’m not wealthy. I don’t live on an ‘estate’. Why should I worry about ‘estate planning?'”

The phrase “estate planning” sometimes conjures up images of Richie Rich, living behind the walls of a huge mansion, attended by butlers and chauffeurs. But the term comes from English legal usage, and simply refers to the collection of property and assets that any person has, large or small.

What we do as estate planning advisors is perhaps better described as “succession planning” – planning for the distribution of your property after you are gone, and in some cases for the management of your property while you are alive. It includes a number of different scenarios, a few of which we describe here.

Family succession planning – using a combination of joint tenancy, lifetime gifts, wills and trusts to govern how the assets that you have will be distributed once you are gone. The assets could be as large as a $5 million stock portfolio or as small as your grandmother’s favorite black pearl necklace.

Business succession planning – If you own all or part of a small business, you will need to consider how the needs of that business will or will not correspond with the needs of your family, at the time of death or the time of retirement. In some cases, our clients’ children will be integrated into the business and ready to take over on their retirement. In others, the children do not have and do not want to have any involvement in managing the business.

Succession planning for the family cottage – How will your children and grandchildren handle the ownership and management of your treasured vacation retreat once you are gone? What if some live far away and are unlikely to use the cabin more than occasionally? What if the roof needs to be replaced?

Succession planning in foreign countries-In the event of having properties in other country it will be necessary to be advised by a local lawyer. Such is the case of Spain and its inheritance tax, where now with the new European Union regulations gives to the testator the possibility to choose between the Spanish law and the law of the country where he is a citizen.

If you do not do any planning, these matters will be left to chance. It is preferable to put some time and effort into planning these issues in advance, and discussing them with your family, before the need arises.