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    Category Archives: Life Insurance

    Using Life Insurance for Charitable Gifts

    This article is provided by Paul Glowienke, Financial Advisor with Northwestern Mutual

    The greatest advantage of a gift of life insurance is that a donor can make a substantially larger gift to charity by using life insurance than by giving any other asset. Relatively modest annual premiums mature into a substantial death benefit at the donor’s death. This is further enhanced when a charity owns the policy because of the income tax charitable deduction the donor receives.

    The donor’s gift (cash to pay premiums) essentially costs less. For example, for a donor in a 30% tax bracket, a gift of $2,500 really costs $1,750 after factoring in the income tax charitable deduction.

    The gift of an existing policy can be relatively “painless” to the donor in several respects. The transfer is simple; all that is required to complete the transfer is a change of ownership form. Absent a loan on the policy, the donor does not recognize income no matter how large the gain. In addition, if the donor does not intend to use the policy as a source of cash, a gift of a policy is not often perceived as a “loss” of an asset.

    A charity-owned life insurance policy requires less administration by the charity than many other assets, like real estate or business interests. In addition, the charity can easily take advantage of cash values in the policy before the donor’s death by using loans or withdrawals. Both the cash value buildup and the death benefit are generally income tax-free to the charity.

    The death benefit, whether from a policy owned by the charity or with the charity as beneficiary, is received by the charity without reduction for estate or income taxes and is not subject to the delays and expenses of probate. The death benefit is less likely to be contested by the donor’s beneficiaries than other assets.

    Congress encourages charitable contributions by providing income tax deductions for gifts to charity. In order to take advantage of these deductions, a donor must meet certain requirements and is subject to certain limits:

    • If giving an existing policy, the amount deductible is the lesser of the donor’s basis in the policy or the policy value.
    • If giving cash, the amount of cash given is the amount deductible.
    • If the gift is to a public charity, the deduction is limited to 50% of the donor’s AGI. Public charities are generally organizations that receive their funding from government and the general public. Some examples of public charities are schools, churches, hospitals, charities for disease prevention or cure, and charities that benefit the community.
    • If the gift is to a private foundation, the deduction is limited to 30% of the donor’s AGI. Private foundations are generally organizations that receive their funding from a small number of donors, often members of the same family.
    • Deductible amounts not used in the current year because they exceed AGI limits may be carried forward for the next five years.
    • The donor must obtain a contemporaneous written acknowledgment from the charity for any contribution (cash or non-cash) of $250 or more.
    • If the amount of the charitable deduction claimed is more than $5,000, the donor must also obtain a qualified appraisal.

    It is vitally important that you check with your financial advisor and your CPA when considering gifting or creating a life insurance policy that will benefit your favorite charity. It is a sophisticated way for you to become a voluntary philanthropist.

    **Article prepared by Northwestern Mutual with the cooperation of Paul Glowienke. Paul Glowienke is an Insurance Agent with Northwestern Mutual, the marketing name for The Northwestern Mutual Life Insurance Company (NM), Milwaukee, Wisconsin, and its subsidiaries. Paul Glowienke is a Registered Representative of Northwestern Mutual Investment Services, LLC, a subsidiary of NM, broker-dealer, and member FINRA and SIPC. Paul Glowienke is based in Newport Beach, CA. To contact Paul Glowienke, please call 949-863-5803, email at, or visit**

    Before You Take Off for Summer Vacation, Take On These 5 To-Dos

    It’s no surprise that Americans spend more time planning their summer vacations than they do planning their estate.  After all, a vacation is a trip you want to go on, while the eternal “trip” is not.

    However, wouldn’t you travel with more peace of mind if you knew you had taken the necessary steps to protect your family if something unthinkable should happen to you?  That’s why you need to tackle these five important tasks before you go on that much-deserved summer vacation:Couple at Beach

    Guardians for minor children — if you have children under the age of 18, you must name a guardian or guardians to ensure that they will never be left in the hands of strangers or people you wouldn’t want raising them.  You can name short-term guardians in case of emergency, and then plan for long-term guardianship.  We recommend a full Kids Protection Plan® to ensure there is no gap in your kids care, ever and no matter what.

    Beneficiary review — if it’s been awhile since you updated your beneficiary forms for retirement accounts, life insurance or other assets, it’s time for a review — especially if there has been a major change in your life.  Make sure insurance and retirement accounts are never passed on to your minor children, outside of a Trust.

    Estate plan review — if you have experienced a birth, death, marriage, divorce or other life-changing event since you last updated your estate plan, you need to be sure those changes are reflected by updating your plan.

    Advance healthcare directive — if you become incapacitated and can’t make your own health care decisions, have you named someone who you can depend on to carry out your wishes?  If not, you need to execute an advance health care directive that includes a durable power of attorney and a HIPAA release so your medical information can be shared.

    Insurance update — is your life insurance still sufficient to meet the needs of your family?  If not, then you should revise your policy before you go.

    If you haven’t done any of these things, it’s time to take care of business.  Call your Newport Beach Trust and Estate Planning Attorneys at Meier Law Firm to schedule a time for us to sit down and talk about an Achieve Your Dreams Planning Session, where we can identify the best ways for you to protect and provide for your family.

    Spousal Trusts – A Valuable Tool For Newport Beach Families

    Couples with assets valued between $20
    million and as high as $50 million typically are reluctant to give away $5
    million or $10 million, in case they someday need the gifted assets.  A spousal lifetime access trust (SLAT),
    coupled with the purchase by the SLAT of some life insurance, may provide the
    best of both worlds:  a completed gift,
    removal of trust assets from a couples’ gross estate and a tax-favored
    leveraged death benefit, all while allowing a beneficiary spouse the
    flexibility of retaining tax-efficient access to the policy cash value, if
    needed in the future.

    Man and Woman on SwingsThe trouble with any gifting
    strategy is that any gift is gone once given. While given assets don’t count
    against your estate, they also aren’t there if you need them later. This can be
    a legitimate concern, whether you have a little or a lot.

    With the longer lifespans we now
    enjoy and the expensive healthcare costs we now face, one strategy is to use
    gifts to purchase life insurance as a gift for your heirs, and to do so with a
    trust arrangement known as a SLAT.

    A SLAT, or “Spousal Lifetime
    Access Trust” enjoyed the spotlight in a recent article titled “SLATs
    and Life Insurance: Have Your Cake and Eat it Too

    Now, knowing how to have your
    cake and eat it too can require a complex bit of planning. However, done right,
    such planning can be powerful. Problem: when life insurance is owned by an
    individual it ends up counting towards their estate value by virtue of such
    “incidents of ownership.” A Spousal Lifetime Access Trust that owns a life
    insurance policy (a tactic normally seen in traditional Irrevocable Life
    Insurance Trusts) will allow access on the part of your spouse during their
    lifetime while also funding the policy for your heirs. If this sounds too good
    to be true, then it just might be if all of the i’s and t’s are not dotted and
    crossed properly.

    To learn more about this
    temperamental and advanced, if potent, device, review the original article and
    consult with Meier Law Firm.

    Contact your Newport Beach
    estate planning attorneys at Meier Law Firm to discuss all of your estate
    planning needs

    Reference: Wealth
    (October 17, 2012) “SLATs
    and Life Insurance: Have Your Cake and Eat it Too

    Important Tips for Designating Beneficiaries in Newport Beach

    Assets that allow beneficiary designations
    provide powerful benefits that permit the owner to designate who will inherit
    the assets, how they can inherit the assets, avoidance of probate, and
    potential tax minimization, to name a few. Most individuals do not give the
    necessary attention to how they designate their beneficiaries.

    Family on HillThere is the right way to do
    just about anything, and it’s usually not the easy way. Thankfully there are
    those rare shortcuts that are actually pretty solid, so long as you remember
    when and where to take them.

    When it comes to proper estate
    planning, the shortcuts are the existing options you already have with
    insurances and retirement accounts that allow you to designate your
    beneficiaries on a simple beneficiary designation form.

    For many of us, the beneficiary
    form is the first practical experience we have with estate planning. For
    thoughtful and downright tactful tips for designating your beneficiaries
    designations, consider a recent article in Fox
    titled “Bulletproofing Your Beneficiaries.

    When it comes to beneficiary
    designations, some of them are shortcuts and some of them are dead-ends, and
    still others can completely undo your estate plans if you simply forget about
    them. That noted, there are at least two key points to consider. The second
    point is the beneficiary designation must be coordinated with your overall
    estate plan to the right beneficiaries (or even a system of trusts) to
    eliminate probate and minimize taxes. The first point, and a source of
    immediate concern, is that you must know who all of your beneficiaries are on
    all your accounts at all times. If you don’t know already, then it’s high time
    for a “beneficiary audit” of all your accounts and, if necessary, a reworking
    of those designations to meet your distribution goals.

    Contact your Newport Beach estate planning attorneys at Meier
    Law Firm to discuss all of your estate planning needs

    Reference: Fox Business
    (October 1, 2012) “Bulletproofing Your Beneficiaries

    Estate Planning for the Military Family

    Members of the armed forces about to be deployed have a lot on their minds, but one thing on the checklist needs to be making sure their legal and financial affairs are in order.  With a little planning, servicemen and women deployed overseas can serve their country with the peace of mind that comes from knowing that their family and their future security are provided for.

    For too many of us, the necessities of estate planning are easy to forestall. But for a military family, the exigencies of the present are too great to ignore. Proper planning is an immediate concern.

    How can military families properly plan? A recent Forbes article titled “Make a Legal and Financial To-Do List Before Military Deployment” sheds some practical light.

    Essentially, military plans always are based on battlefield “contingencies.” Whether over there or on the home front, changes on the “battlefield” are hard to predict. For example, for a deploying soldier (sailor, airman, marine, or coast guardsman), have you secured enough life insurance to provide for your family? If yes, does your life insurance specifically carve out war, war-risk, service casualties, and the like as exclusions? Regardless, make sure you maximize any government-offered life insurance, as it does not exclude such risks.

    Ultimately, do not ignore making proper estate plans as well. Be sure to coordinate your estate planning with the beneficiary designations on your life insurance and other assets. While a Legal Assistance Officer in your local Judge Advocate General’s Office can assist, most state bar associations have attorneys who will assist you at little, if any, financial cost.

    Contact Meier Law Firm to discuss how we help military families with their estate planning. Meier Law Firm is very grateful for the tremendous service and sacrifice that our military personnel provide to our country.

    Please join us in September 2012 for the Orange County Young Executives' event titled "Bridging the Gap," which will recognize our military personnel and help raise awareness for the need to help our military men and women transition back to civilian life after their term of service. Visit for more information on the event.

    Reference: Forbes (June 28, 2012) “Make a Legal and Financial To-Do List Before Military Deployment

    Estate Planning for the Family Farm

    Farmers and ranchers are typically strapped for cash so when one of them dies leaving an estate large enough to be exposed to the federal estate tax the family can expect to have to sell something to cover the tax. That does not have to be the case. The estate tax has been described as a “voluntary” tax. Voluntary, that is, if you are willing and able to take advantage of the planning opportunities that are in the law. If not, life insurance can be a very appealing alternative to having to sell the family farm.

    Living and working on a farm oftentimes means taking a different position toward land itself. If you also own the land, then it means you need to take a different stance toward your assets and your family wealth.

    Farmers are in need of a proper and exhaustive estate plan more than anyone else. Fortunately, Hoosier Ag Today provided some helpful pointers in an article titled “Estate Planning for Family Farms and Ranches.”

    While there are consistently bumper harvests, the land keeps on giving. Unfortunately, the land also is an incredibly valuable thing due to this potential giving. As a result, that value makes it fall prey to estate taxes if you try to pass it on to the next generation.

    To truly own and understand the ownership of your land, it is necessary for a farm owner to make proper estate plans and to prepare for succession of the farm. For small farms that might be a simpler process, even modest planning can help preserve the family and the farm alike.

    In the end, many farms will need far more than modest planning. The key is to select and implement the appropriate strategies for your unique circumstances. I recommend reading the original article, even if you aren’t a Hoosier (or don't even own a farm as the same issues hold true for most businesses).

    Contact Meier Law Firm to discussion the bussiness succession options you can implement in your business.

    Reference: Hoosier Ag Today (June 4, 2012) “Estate Planning for Family Farms and Ranches

    Unclaimed “Death Benefits” Await Claims

    The reality is that life insurance companies do not always pay out claims.

    A recent article in the Wall Street Journal may give you pause regarding whether you might be owed some life insurance money.

    According to state regulators, as much as one billion dollars is languishing in the form of uncollected life insurance death benefits. All is right by the insurers, however, as most policies require the beneficiary to file a claim to collect. This occurs when a beneficiary doesn’t collect or doesn’t know that they are entitled to collect.

    Unjust or not, this phenomenon has raised regulator suspicions and, out of good will or regulator urgings, some companies have started programs to determine if policy holders have passed and whether claims ought to be filed.

    Still, it is a difficult enterprise, and one of the reasons insurers let beneficiaries make the claims in the first place, so there is room for error. So, if you want to ensure that you (or your loved ones) receive all that is owed, consider doing some sleuthing yourself. The original article has some advice regarding how to find out about a missed policy.

    An even bigger lesson is for policy holders, and estate planners generally. One billion dollars sits in policies that were meant to care for the policy holders’ families, and it is there mostly because it’s unknown.

    As a result, the most important part of proper planning, whether elaborate or simple, is making your family aware of what you own, what your plan is, and how it is to work. This especially includes any life insurance you may own.

    To learn how we can help your family have a plan in place to transfer wealth, visit us today at

    Laura K. Meier, Esq.

    Reference: The Wall Street Journal (December 31, 2011) “Are You Owed Life Insurance?”

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