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Expensive gifts? Insure them properly

12/26/2018

If Santa was especially generous this year, let’s get the right insurance for those gifts.

The presents are opened. Hugs and smiles fill the room. And most of your presents don’t need more than a huge “thank you.” Maybe a kiss where appropriate.

But some of these gifts need just a bit more.

So, let’s talk about what you should do right after Christmas.

Understand your personal property coverage.

Under your typical homeowners, renters, or condominium insurance in Napa, most of your new Christmas presents will be covered under the section in your policy that’s often called Coverage C.

But there are three things to double-check in your policy after you received an expensive gift.

First, is the face amount of coverage high enough to cover all of your possessions?

Is the deductible appropriate? We often assume that everything is OK. Now is a good time to make sure.

Second, do you have Cash Value Coverage or Replacement Cost Coverage?

Most insurance is written with Replacement Cost Coverage. But that’s not always the case.

A beautiful new gift starts depreciating right away. In a year, it may not be worth what it was originally worth. Replacement Cost Coverage makes sure that you get “new for old” if there is a claim. Double-check that your policy has this feature.

Finally, are there limits on certain types of property?

No one likes to read the fine print. But in almost all policies, there are certain items that have limited coverage; it’s important to know these limits and exclusions.

Schedule extra coverage where necessary.

Many policies limit coverage on expensive or fragile things. Here are just a few of those:

Jewelry

Furs

Firearms

Expensive electronics

Collectibles

Fine art

There are often low dollar limits of coverage on these items. There can also be limits on how the loss was incurred.

For instance, if your diamond ring was stolen, there is usually some coverage. But if it was lost (rings do slip off fingers!) there is often no coverage.

Even if the loss is covered, there can be a disagreement between you and the insurance company about the actual value of certain items.

The solution is simple.

You can usually “schedule” extra coverage for these high-value items. It’s sometimes referred to as adding a “floater” to your policy.

Scheduling coverage for special items is less expensive than most people realize. It improves your protection in several ways:

Scheduled items are usually exempt from a deductible.

Scheduled items often have an agreed-upon value ahead of time.

Scheduled items are usually covered for more than just theft or fire.

My advice:

First, have a relaxing holiday season. Take time to reflect on your blessings, especially family and friends.

Then, take a few minutes and call your local agent to discuss your coverage. Make sure your new gifts are insured properly.

If you don’t have a local agent, I’d be happy to answer any questions you have. Send me an email or call me. I’d be happy to answer your questions with no obligation.

Happy holidays, everyone, and thank you for following my column over the years.

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Long-term care insurance: two policy choices

12/12/2018

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If you decide to shop for long-term care insurance, you’ll need to choose between types of policies.

In this final article of the series, I’ll help you better understand that choice

The stand-alone policy

A traditional approach to long-term care coverage is a stand-alone policy. This type of policy covers only long-term care. It’s not attached to any other policy.

A stand-alone policy is a simple and straight-forward proposition. It also provides policy flexibility.

You can choose your daily benefit, a length of months (or years) payable, and a “time-deductible” called an “elimination period.” These all can help you craft a solution within your budget.

But as a reader reminded me a few weeks ago, these types of policies have recently seen premium increases... even on existing policies. That’s because of how these policies are structured. These traditional types of policies allow for rate increases after the policy is issued if overall claims experience show that a rate increase is necessary.

However, the unique benefits may outweigh the risk of a rate increase. A stand-alone policy should still be considered when planning for future long-term care needs.

A long-term care ‘rider’

In recent years, the insurance industry has developed a new way to cover long-term care needs. It’s accomplished by issuing a “rider” (or add-on) to a permanent life insurance policy.

I’ll simplify this, so please refer to specific policy language before making a final decision.

For an additional premium, you can add a feature to your life insurance that pays you cash when you become eligible for long-term care.

There are two major advantages to this type of policy:

The first advantage is that your premium won’t go up. That’s because when benefits begin, the rider pays out a set percentage (typically 2 percent) of the face amount of the life insurance policy each month.

Here’s how that works:

You purchase a $200,000 permanent life insurance policy with a long-term care rider. Later on, you require long-term care.

You are eligible to receive two percent of the face amount each month ($4,000) until the face amount is exhausted. The proceeds are deducted from the face amount of the policy.

In short, your life insurance policy is paying out an accelerated death benefit.

The second advantage is that the entire face amount will eventually be paid out to you, as long as the policy is in force.

So, if you never require long-term care, the policy will still pay the face-amount upon death, or it will “mature” and pay the face amount to you or your estate while you are alive.

If you require care for only a short period of time, the amount paid out will be deducted from your death benefit; the remainder of the face amount is still available for your heirs.

If you require long-term care for an extended period of time, your estate is protected, and you will have money to make the best choices possible for your long-term care.

Which policy is best?

There is no simple answer to that question.

Your financial goals, your budget, and your tolerance for risk will be part of that decision. A local agent can help you craft a unique solution that’s right for you.

If you don’t have a local agent, I’d be happy to answer any questions you have. I specialize in long-term care insurance. Send me an email or call me. I’d be happy to answer your questions with no obligation.

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Long-term care insurance: 5 big questions

11/28/2018

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This week, I’ll answer some common questions I receive about long-term care insurance.

1. Who qualifies for long-term care insurance?

Not everyone qualifies.

This is the toughest conversation that I have with people here in Napa, California.

You can purchase long-term care insurance only when you are healthy and before you need it.

Here is some sobering data from a study in 2007 by the American Association for Long-Term Care Insurance:

Your chance of being declined for a policy at age 50 is about 14 percent.

Your chance of being declined for a policy at age 70 is about 45 percent.

Putting off purchasing long-term insurance is risky.

2. What type of care is covered?

Unlike Medicare and Medicaid, your long-term care insurance policy covers a wide variety of care options.

Best of all, the government is not in charge of deciding what care you’ll receive.

You are.

Most long-term care policies also include coverage for a care coordinator to help you navigate the many options available.

Instead of being told by the government what you’ll get, you’ll be part of the decision-making team.

And you’ll have choices you may not otherwise have under government coverage.

It’s more than just “nursing home coverage,” long-term care insurance coverage also includes:

Alternate care

Adult daycare services

Nurse, therapists, and home-health aids

Respite care (giving your caregivers a break)

Personal care services for activities of daily living

Homemaker help (shopping, meal preparation, housekeeping)

3. Where can I receive long-term care?

Long-term care insurance is designed to provide coverage almost anywhere:

Your own home

Assisted-living facilities

Licensed nursing homes

Other qualified long-term care facilities

International facilities for long-term care

Long-term care insurance will let you decide where to get care.

4. When does coverage begin?

You qualify for benefits when you become chronically ill and are no longer able to perform two or more of these activities of daily living: bathing, dressing, eating, transferring, toileting and continence. Also, if you need constant supervision due to a severe cognitive impairment, you generally qualify.

Once eligible, your time-deductible begins. It’s called an elimination period and you can choose between 90 days and 365 days before benefits begin.

5. How much does long-term care insurance pay?

You get to choose your benefits.

Once your elimination period (time-deductible) is satisfied, your policy will pay according to the two benefit options you selected:

Monthly benefit: This is the maximum amount per month that can be paid. This can range from $1,500 per month to as much as $10,000 per month.

Policy limit: This is the maximum number of months that you receive benefits. It typically ranges from 24 to 60 months.

My advice:

The benefit choices of elimination period, monthly benefit and policy limit affect your premium.

You should work with your local insurance agent to help you figure out which choices make the most sense for you.

If you don’t have a local agent, I’d be happy to answer any questions you have.

I specialize in long-term care insurance. Send me an email or call me. I’d be happy to answer questions with no obligation.

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Long-term care insurance: Do you need it?

11/14/2018

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Benjamin Franklin said, “In this world, nothing can be said to be certain, except death and taxes.”

If that’s so, there’s another uncomfortable certainty for most of us... getting old.

Thanks to modern medicine, a lot of us will live to a “ripe old age.” And that can be scary. We may need help with things. But many of us haven’t planned for how we’ll receive that help, and who will pay for it.

Long-term care insurance is one way to plan for “who will pay for it.”

What is long-term care?

A person is considered requiring long-term care when they need ongoing help with several of the common activities of daily living. These are things we all take for granted when we are healthy.

These activities include bathing, dressing, eating, transferring, toileting and continence. Long-term care is also considered necessary when severe cognitive impairment such as Alzheimer’s and dementia is present.

Long-term care can be provided in a number of ways, such as in a nursing home, adult day care, home health care, and other forms of assisted living. Long-term care as an industry has grown in flexibility with an emphasis on as much independent living as possible.

What are your chances of needing long-term care?

The numbers vary, but your chances of needing long-term care that costs money are really high.

According to AARP, by the time you reach age 65, you will have a 50-50 chance of needing long-term care that someone will have to pay for. Other data sources put that number as high as a 75 percent chance.

You may say, but Bruce, I know a lot of people over 65 who aren’t in a nursing home!

That’s true.

But long-term care includes not just a nursing home, but all assisted care that costs money. And it’s expensive. Even a few short years in a nursing home at the end of life can destroy your life savings.

The facts are stunning; most of us will need to think about long-term care sooner or later.

How expensive is long-term care?

According to Genworth’s Cost of Care Survey in 2018, it’s expensive. Here is data that shows average annual costs in our beloved Napa, California:

Nursing home, semi-private room: $119,000

Assisted Living Facility: $65,000

Home Health Aid: $60,000

It doesn’t take long for these costs to eat up life savings, retirement plans and equity in a home.

How can long-term care insurance help?

Just like all insurance, long-term care insurance is designed to protect your assets. At the end of your life, these assets are a legacy for your loved ones.

Long-term care insurance pays the expensive bills so you don’t have to, and it protects the dreams you have for your children and grandchildren.

My advice:

If you have assets to protect, I first recommend having the discussion about long-term care with your loved ones. Then, have the discussion with your local insurance agent. Trust them to help.

If you don’t have a local agent, I’d be happy to answer any questions you have. I specialize in long-term care insurance. Send me an email or call me. I’d be happy to answer questions with no obligation.

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HOA insurance mistake #3: Forgetting the optional coverages

10/31/2018

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We all forget things. But forgetting certain ingredients in your homeowners association (HOA) insurance recipe can be a disaster.

These optional coverages can look boring. They aren’t exciting like chocolate. They’re more like salt and yeast that you can’t see. But if you forget them, your insurance recipe can turn out like a disaster.

So, let’s run down the list of some of the ingredients you should discuss with your agent. You may not need all of these, but you should be aware of them.

Umbrella coverage

I mentioned in my last article that you may need umbrella coverage in an HOA insurance policy in California.

Why? Two reasons.

First, even though the Davis-Stirling Act requires a minimum of $2 million of liability coverage, in today’s world, that may not be nearly enough. It may less expensive, and more comprehensive, to increase that limit with an umbrella policy.

Second, an umbrella policy often contains broader coverage language.

In simple English, this means that some types of things that may be denied under your regular liability policy just might be covered under a broader umbrella policy.

That’s no guarantee of future coverage (I have to be careful here), but it’s sometimes the case. Umbrella coverage can sometimes operate as “gap” coverage. It’s worth discussing with your agent.

D&O insurance protects the board much like malpractice insurance protects a doctor from damages due to mistakes, or an insurance agent or accountant from accidental errors and omissions.

You might ask why that benefits the association. Simple. The cost of defending the board from a lawsuit will typically be passed on to all the association members according to the CC&Rs (the governing documents everyone in the association is bound by).

Read the exclusions. Ask questions.

This type of coverage can vary greatly between policies and carriers. As it is in recipes, so it is with insurance. The devil is in the details. And the details are often found in the exclusions section of a policy. Always go through it carefully with your agent.

Flood insurance

We know how wet it can get in Napa, Calistoga, St. Helena, Yountville, American Canyon and Sonoma. The question to ask your agent is... do we need to consider flood insurance? Don’t assume the answer.

Sewer drain backup coverage

A close cousin to flood insurance is sewer backup. Part of preparing your HOA coverage package is to discuss all of the what-ifs with your agent.

Employee-related coverages

Even if you have only one employee, and even if they are part-time, you need to discuss optional coverage that would cover employees and their actions.

You and your agent can discuss Crime Coverage (which can protect against employee dishonesty), Workers Compensation and Employment Practices Liability, to name a few.

Earthquake insurance

This is often called Differences in Conditions Coverage. It’s optional (if offered). But it should be on the discussion list when preparing the recipe for your final HOA insurance package.

Commercial auto coverage

When you or an employee drives a personal vehicle on an association business-related errand, the association could be held liable for an accident. Discuss this scenario ahead of time.

As always...

Make sure you sit down with a local agent who has your best interests at heart. They can take the time to make sure the recipe for your homeowners association insurance is exactly what you need.

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HOA insurance mistake #2: Thinking small

10/17/2018

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Small Homeowners Association (HOA) insurance coverage can be cheaper. But that can cost high assessments later.

The easiest mistake to make when reviewing your HOA insurance policy is to think too small.

After all, many of the condo and homeowners associations in Napa, Calistoga, St. Helena, Yountville, American Canyon and Sonoma are small.

And small associations don’t need big policies, do they?

Yes, they do.

It’s a myth that a small association needs a small policy

Everything Perfect Condos (fictional but sounds wonderful, doesn’t it!) had just 36 units.

The board members were friends with most of the owners, and as owners themselves, they tried to keep insurance premiums as low as possible each year.

They thought their risks were low. They were in a safe area of town, and had no pool, no employees, and new common grounds... no cracked sidewalks here!

So, they bought the lowest liability limits under California law (the Davis-Stirling Act): $2 million of liability coverage. Surely, that was enough.

But it wasn’t enough when a little boy was seriously injured in a freak accident on the common grounds.

He was in and out of the hospital for over a year. The total judgment, including pain and suffering, was for $3 million. Each member was on the hook for future assessments to cover the difference.

Everything Perfect Condos was small. But they had a big insurance need.

Don’t settle for small liability coverage

A slip-and-fall injury is one of the most common risks that homeowners associations face... and one of the most expensive. Hazards show up out of nowhere, even in the best-maintained properties.

Wet, snowy, or icy sidewalks are accidents waiting to happen, and magnets for large claims.

Every HOA is just one slip away from a large claim. Large judgments are awarded on emotion, suffering, and “what should have been done.”

They never seem logical to the defendant. They are all about the victim.

It costs less than you’d think to increase your liability limits (per occurrence and aggregate) to meet modern realities.

And adding an umbrella policy to fill in gaps and increase limits is also a good thing to consider (more about that in my next article).

Don’t risk a future association assessment to save a little premium today.

Don’t settle for small coverage on your buildings

I’ve been an agent for more than 20 years, and I’ve rarely seen a property rebuilt for what it was thought it would cost at the time an insurance policy was purchased.

New building codes get passed, and appraisals don’t get revisited. No one plans to not have enough coverage. It just sort of happens over time.

If you haven’t had your association’s buildings appraised in the last couple of years, it’s a good idea to consider doing that.

It’s also a good idea to check and see that you have Building Ordinance Coverage.

Building Ordinance Coverage has three parts:

Coverage A, which covers rebuilding an undamaged part of a building that authorities required be torn down due to adjacent damage.

Coverage B, which pays for the mess of demolition and cleanup.

Coverage C, which pays for new building code requirements like updated sprinkler systems, hard-wired smoke detectors, handicapped accessibility, and other code upgrades.

My advice

Don’t settle for small coverage at the risk of a large claim later. Call your agent today.

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HOA Insurance Mistake #1: Not understanding the CC&Rs

10/3/2018

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In my last article, I talked about several ways your Homeowners Association (HOA) insurance policy could be inadequate. This week, I’d like to start a series about specific mistakes to watch out for in your Homeowners Association Policy.

What are CC&Rs?

Covenants, Conditions and Restrictions (CC&Rs) are the documents that govern your shared neighborhood, such as a condominium association, a townhome association, a mobile home park and even some neighborhoods with single-family detached homes.

Here in our immediate area (Napa, Calistoga, St. Helena, Yountville, American Canyon, Sonoma) we have dozens of neighborhoods that have CC&Rs.

These documents have legal authority, and the agreements are entered into willingly so that everyone knows what they can and can’t do in the neighborhood.

They also state the responsibilities of the association, and the responsibilities of the individual condo or homeowner.

What’s this got to do with insurance? A lot.

There is usually a section within the CC&Rs that deals specifically with insurance.

Sometimes, if you are lucky, it’s been carefully drawn up and reviewed by an attorney.

The insurance section is clear, simple, and lets you know where the association’s responsibilities end, and the homeowner’s begins.

An agent should be able to read the CC&Rs and understand exactly what type of coverage to write for the association.

That’s the way it’s supposed to work. And it usually does.

Usually, but not always.

How can misunderstanding CC&Rs cause a problem?

Several ways. For instance, under civil law in the State of California, an HOA “master” policy is not required to be “primary” before other coverage pays.

That sounds like “no big deal.” But it is a big deal, and though normally the HOA policy should be primary, it isn’t always.

This can happen because of poorly written CC&Rs, or a misunderstanding by the board or the agent. Claim time is not when you want two insurance companies fighting over who is the first-payor on the claim.

Another more common error is an accidental gap in coverage. We talk about HOA insurance policies as “walls-out” coverage.

That means the master policy that is usually required by the CC&Rs should cover everything from the exterior walls outward. The condo owner is then required to insure the “inside” of the unit.

That sounds simple.

But CC&Rs are unique. If the documents are not read closely and carefully, an accidental gap in coverage between the association’s master policy, and the condo owner’s personal policy can happen at claim time.

Finally, overlapping coverage can be a problem. Most people would think... “How can having too much coverage be a problem?”

That’s common sense, but not “insurance sense.”

Insurance companies always use an “other insurance clause.” It means... “If there’s other coverage, we don’t pay.”

Sounds fair enough.

But the way it sometimes plays out, if the CC&Rs are poorly written, or are misunderstood when the HOA policy was sold, you can have a claim denied by both companies, each claiming the other was responsible.

Having overlapping coverage could mean you have no coverage.

My advice

When purchasing an HOA policy, you should always work closely with an agent who knows the importance of understanding your particular CC&Rs.

A good agent will read the CC&Rs and review them carefully with the underwriting department that is preparing the quote and the policy.

If you are an HOA board member, a lot is riding on getting this correct.

If you have questions, call an agent today.

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Is your homeowners association policy broken?

9/5/2018

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I was speaking with a friend the other day, and the topic of Homeowners Association (HOA) insurance came up.

Let me share some of my thoughts on our discussion.

You love your condo. You love that all the “big things” are taken care of by the association. Things like lawn care, outside maintenance, roof repairs, and of course... insurance. It’s all good, right?

Not always. Let’s take a look.

How it works

HOA insurance is the coverage that your condominium or homeowners association in Napa and the Bay Area must purchase to insure the common interests of all the property owners in the association.

It’s often referred to as “walls-out” coverage. (Though in some cases, the HOA Master Policy covers interior walls as well. Consult the policy to find out which applies to your association.)

Typical things that are covered include roofs, exterior walls, common buildings such as gazebos, atriums, lobbies, pools and exterior walkways.

An HOA insurance policy also covers liability for accidents that occur on common areas.

How it is unique

The interesting thing about homeowners associations is that each association is governed by its own unique Covenants, Conditions & Restrictions (CC&Rs). These are the legally binding documents that are the rules for the association and its members.

The CC&Rs tell condo owners whether or not they can park a boat in their driveway, what size shed they can have and many other things.

It also states what the HOA insurance should and should not cover. That makes each HOA policy a unique, specially crafted solution.

How it can break

Because every homeowners association requires different insurance solutions, it’s easy to get it wrong.

There is no “one-size-fits-all” policy that meets every association’s needs. It’s common for associations to find out after the fact that they were underinsured.

A common mistake is to cut corners on certain coverages, like sewer backup, earthquake coverage or building code and ordinance coverage. Another mistake is to cut corners on liability coverage and Directors and Officers coverage.

When there is a claim, any one of these mistakes can cost everyone in the association a special assessment to pay for what was not covered in the HOA policy.

A claim will test if your HOA policy was solid. A broken policy could cost every member a lot.

What you should do

If you are an association member, you should ask your board for a copy of the master policy.

Then take that to your trusted insurance agent. Here’s why: you need to make sure that the place where the HOA coverage ends is exactly where your own personal condo policy picks up. You don’t want gaps.

If you are an association board member, you should schedule a review of your policy with an experienced and trusted agent.

Also, be sure to bring along a copy of your CC&Rs. You are responsible for making sure that there are no gaps that could cause future assessments.

Remember... a cheap price is forgotten at claim time.

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Life insurance mistake #4: choosing to neglect a policy

8/22/2018

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Life insurance is like a lot of things — neglect it, and it may fail you when you need it most.

Sometimes, the worst choice we can make is to not make a choice. Someone reminds us that we ought to do something. We agree: “Why yes, I ought to do that.”

But we don’t get around to it.

And sometimes, like in the story below, our non-choice makes a choice for us.

Patty, Paul and life insurance in a drawer.

Patty and Paul were new “empty-nesters.”

Their son had a new job and had finally quit moving back home. Their daughter had finally graduated from college. The kids were truly on their own and doing well for themselves.

Paul suggested downsizing their home. Maybe buy a motorhome too. Patty thought that sounded great.

Patty also suggested they review their life insurance to make sure it fit their new empty-nester situation.

She thought that now might be a good time to pull out the life insurance policies from the drawer and talk to an agent about their new dreams and goals.

Paul said, “Why yes, we ought to do that.”

Time passed. Patty and Paul retired.

Paul’s ideas worked out. They moved to a smaller home. It was a beautiful new townhome. And of course, they bought a motorhome and toured the country.

But they never quite got around to Patty’s idea of reviewing their life insurance.

More time passed. New joys arrived.

Grand-kids. Wow! Patty and Paul fell in love with the little rascals.

Everything looked new through the eyes of these precious grandchildren. Oh, what they wouldn’t give to make sure these little ones had every opportunity in life.

And then Patty and Paul remembered their life insurance. They could increase the face amount and leave a legacy for these precious little grandchildren when the time came.

Things changed, and dreams died in a drawer.

But Paul and Patty’s health had changed. Paul now had a heart condition, and Patty had recently survived a cancer scare.

They dug the life insurance policies out from the drawer and realized that the policies were due to expire soon.

They were near the end of their 30-year term. The policies were renewable at affordable rates only if they were in good health. But now, they weren’t insurable.

If only Paul and Patty had not neglected their polices. Now, their dreams had died in a drawer.

Dreams matter. Life changes.

As I finish this four-part series on common life insurance mistakes, I want to personally appeal to you.

I’ve been an agent for over 20 years. I’ve seen dreams that are met by life insurance, and I’ve also seen dreams not fulfilled because of poor life insurance planning.

Please... pull out those old policies hiding in your drawer. Blow off the dust and call an experienced agent to talk about your goals and dreams.

Let an experienced life insurance professional help. Do it today.

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Life insurance mistake #3: beneficiary bungles

8/8/2018

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You can make a lot of mistakes with life insurance. But none is worse than bungling the beneficiary.

Without expert help, you could create a financial disaster after you die. I’m not an attorney, and this is not legal advice. But it’s a starting place for discussion with trusted professionals.

Here are five “beneficiary bungles” that come to mind:

1. Not specifying the exact beneficiary.

If you name “my family” or “my kids” as the beneficiary, you are risking chaos after you die. Families change. People change. If you name a person or persons as the beneficiary, always use complete names, dates of birth, and other identifying information.

2. Not having back-up beneficiaries.

If your beneficiary is a person, and you and they are both killed in the same accident, the death benefit will go to your estate. And you really don’t want that. (See number 3.) So always have two contingent (back-up) beneficiaries.

3. Naming your estate as the beneficiary.

Estates are subject to federal inheritance taxes.

But that’s not all. Estates are also subject to claims from creditors and others.

And estates often get tangled up in probate court for years before anyone sees any money. Never name “my estate” as the beneficiary.

4. Naming a minor child as the beneficiary.

Don’t do this.

California, like most states, will not allow a minor child to directly receive life insurance proceeds. Instead, a court will appoint a trustee to handle the money for them.

You don’t want that. This is where a well-written trust can be the best option. In a trust, you can explain exactly how the money should be used for the kids.

If you don’t want to set up a trust, at least designate the custodian of the money, using the Uniform Transfers to Minors Act (UTMA). It’s relatively simple to do.

5. Creating the “unholy trinity” tax trap.

Technically, this is known as the Goodman Trap or the Goodman Triangle named after a famous 1946 court case.

When the policy owner, the insured person, and the beneficiary are three different people, the IRS will look at the death benefit as a gift and tax it. Here’s how that works:

Sarah has a disabled child with ongoing medical bills. So, she buys a life insurance policy on her husband, Bill, and then names her son, Alec, the beneficiary.

It makes perfect sense, right? If Bill dies, she will have a harder time taking care of Alec’s medical bills. And she wants to make sure that the money is understood to be for Alec, not anyone else.

Bill died one day. The death benefit was paid to Alec, and the court appointed Sarah the trustee of the money.

Weeks later, the IRS sent her a notice. She owed a gift tax on the money that Alec received. The IRS viewed the money as a gift that she (the owner) gave to her son (the beneficiary). It was taxable.

My advice:

Don’t do this alone.

First, consult with an experienced life insurance agent before naming a beneficiary.

Second, consult with an attorney who specializes in the areas of estate planning, probate, and trusts.

Life insurance planning is safest when done as a team activity. If you haven’t reviewed your life insurance policies in a while... give a trusted professional a call today.

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Sackrison Insurance Agency

Expensive gifts? Insure them properly

Long-term care insurance: two policy choices

Long-term care insurance: 5 big questions

Long-term care insurance: Do you need it?

HOA insurance mistake #3: Forgetting the optional coverages

HOA insurance mistake #2: Thinking small

HOA Insurance Mistake #1: Not understanding the CC&Rs

Is your homeowners association policy broken?

Life insurance mistake #4: choosing to neglect a policy

Life insurance mistake #3: beneficiary bungles

Bruce Sackrison

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