Estate/Financial Planning - Fairplain Presbyterian Church

Welcome To the Estate/Financial Planning

Part to the FP Church Web-Site

By: Roccy DeFrancesco, Jr., JD, CWPP™, CAPP™, MMB™

This part of the church’s web-site was designed to give members material to read when it comes to basic estate planning topics as well as financial planning topics.

The goal with this web-site and other continuing education the church will be offering on these subjects is to help the members become fully educated on important matters and to remind members to think of the church when putting together a financial and estate plan.

For many, the church is an organization that provides very important and needed spiritual and emotional support. It is the opinion of many in the church that IF members were reminded of the church when organizing their estate and financial plans; that many would want to incorporate the church into those plans.

As many members know, many churches today are not doing well financially. Our church is doing alright, but anytime we can be supportive of the church (especially if it is not painful), we should do it.

It is very easy to name the church as a percentage beneficiary in a will or trust. If you name the church as a beneficiary, some portion of your estate will be transferred to the church when you pass. Incorporating the church into your plans will help ensure that the church will have the financial resources to continue to provide the support is offers now for generations to come.

Below is some information to learn more about basic estate planning and if your estate plan is in order.

I will soon be adding shortly information on financial planning, including information on long-term care insurance, life insurance, annuities, reverse mortgages, etc.

Estate Planning

Do you think your estate plan is in order?

Many clients think that because they have an attorney and an accountant/CPA/EA they work with that the answer is yes.

Many clients know their estate plans are NOT in order but believe they are too busy and that they will get to their estate plan in “when they have the time.”

Take a look at the following statistics put together by The Wealth Preservation Institute when it comes to clients’ estate plans.

-1-2 will NOT have a simple WILL. (Usually those are the younger client. Without a will, you will be allowing the state you live in to dictate who gets your assets at death and more importantly who gets custody of your minor children).

-9-10 will NOT have DURABLE POWERS. (Durable Powers deal with what to do with a client in the event they get incapacitated or, should the situation arise, where a decision needs to be made about discontinuing a feeding tube to sustain life).

-5-6 will NOT have MARITAL TRUSTS (A&B, marital, or living trusts are used to maximize estate tax exemptions which can save the heirs of an estate $500,000 in estate taxes (assuming a client dies after 2010). Trusts also avoid the probate process, which costs between 4-10% of the entire estate. Trusts can also make sure certain assets are not taken by the government as a setoff for benefits received for long term care expenses).

-9-10 will NOT have a FAMILY LIMITED PARTNERSHP. (FLPs are used for asset protection and to discount the value of an estate).

-7-8 will NOT have an IRREVOCABLE LIFE INSRUANCE TRUST (ILIT). (An ILIT will pass a death benefit from a life policy income and estate tax free to the heirs/beneficiary).

To learn more about each tool, please click on its name above which will take you to a link with further information.

Estate planning itself is a very broad topic and can not be covered in an introduction web-page. Therefore, we have listed the topics that need to be covered in an estate plan which you can click on to read more about. We encourage you to surf this site to learn more about estate planning and hope you will contact us to help put together a complete plan that covers not only your estate plan, but also your asset protection plan and financial plan.

YOU SHOULD BE AWARE THAT THE CHURCH IS WORKING WITH FINANCIAL PLANNERS WHO WILL DONATE A SIGNIFICANT PORTION OF THEIR COMMISIONS TO THE CHURCH FOR CHURCH MEMBERS WHO RECEIVE HELP FROM THEM. ENJOY THE FOLLOWING MATERIAL, BUT PLEASE CONTACT roccy@comcast.net SETUP A TIME WHEN YOU CAN TALK WITH AN APPROVED ADVISOR ON ONE OF THE FOLLOWING TOPICS.

-Life Insurance (LI)—Besides the estate planning documents mentioned above, LI is the foundation of most estate plans. Younger clients buy life insurance to protect the family in the case of an early death by the income producing spouse(s). Many clients use life insurance as an investment because assets grow tax free and come out income tax free from the policy (especially coupled with the concept of Equity Harvesting). Clients with estate tax problems use life insurance to pay for their estate taxes. Say what you want about life insurance, but it has a vital role in nearly every client’s estate plans and financial plan. The problem with LI is that most clients do not understand it which leaves them prey to LI agents who sell policies in the advisor’s best interest an not the client’s best interest. Click here to learn about life insurance (and whether you have the right or best kind of policy for your situation).

-Life Settlements—Most clients do not know what a life settlement (LS) is and how it can be beneficial in an estate plan. Ask yourself: why keep a life insurance policy you don’t need. The answer is you shouldn’t. There are many reasons not to keep a life policy when you reach the age of 65. The beneficiary might have predeceased you. You can not afford or do not wish to pay the premiums. You’re policy is not owned by an ILIT and it should be. This is a very interesting estate planning topic for you if you are nearing or are over 65 and/or if you have parent(s) who have life insurance and are over 65 years old.

-Reverse Mortgages (RM)—RMs seem to be all the rage these days now that we see Robert Wagner and James Garner selling them in TV adds. RMs can be a useful tool IF a client over the age of 62 wants to stay in their home, but as a general rule, RMs are very expensive and many times is NOT the right option for a client. A RM is sold as a no risk no downside load for clients who would like to get money from the equity in their homes AND who DO NOT want a monthly payment. It sound great, but most of the time a client would be better off selling the house and downsizing or using the 1% CFA mortgage coupled with a single premium immediate annuity.

-Long-Term Care Insurance—What is the biggest expense for clients over the age of 65? Typically it is there long term care expenses (drugs, doctor visits, surgeries, nursing home care). How do clients typically pay for this expense? Simply out of pocket as an after tax expense where they believe the premium is never coming back (which is why most clients don’t buy it. If you would like to learn how to deduct the premiums, if you would like to know how to have your premiums returned to your estate, if you would like to know how to pay a LTCI premium and have access to the money, then you need to read our more detailed material.

-Charitable Planning—What would you say to a tool that could do the following for you: Increase your discretionary (“spendable”) income; reduce or eliminate your income taxes, capital gains taxes, and estate taxes; securing a tax free inheritance for your heirs; allow you to leave a lasting family and social legacy. You would not normally think of the previous as benefits of charitable planning, but it is and it is likely that if you have any amount of wealth or income that you can benefit from using a charitable plan in your overall estate plan

While the above is not an exhaustive list of topic that need to be discussed in an estate plan, the material covered on this site is quite extensive and should give you a feel for whether your estate plan is in order.

Estate Planning Test

This test is designed to help you determine if you have an adequate estate plan or if you need your plan reviewed and updated. If you do not know if you have one or more of the items asked about or if you do not know what the question is asking; please put NO for your answer. It is very typical for clients to have no idea what their attorney implemented for them and if you fall into that category, it is our opinion that it is time for you to have your plan reviewed again.

For this exam, if you do not get a 70% or higher you should have your estate plan reviewed. If you get a 50% or less, you should run to the advisor you trust (our firm preferably) to have your estate plan reviewed. If you get a 30% or less, you should immediately fire your current attorney and contact our office immediately to have us help you implement a proper estate plan.

To take this exam, please click on the following link: www.thewpi.org/assessment.

The username for the exam is estate and password is plan.