Ten Life Insurance Tips
Life insurance can be a
great estate planning and
financial planning tool. For
example, it can replace lost
income during your work-
ing years, and thereafter,
help replace lost retirement
and pension income. If
properly integrated into
your estate plan, it can
provide non-taxable monies Joseph S. Karp, Domestic Trust and nam-
to help pay estate taxes. But C.E.L.A.
like any other tool, life insurance must
be properly managed. How it is pur-
chased and owned will impact whether
the proceeds are subject to estate
# #
taxes and how your family receives
Listen to Joe Karp with
Anita Finley on Saturday,
October 31 from 7:30-8:00 AM
on WSBR 740AM and on the
# #
Internet at www.wsbrradio.com.
the money. Here’s a concise list of
some issues to consider when pur-
chasing life insurance:
1. If you are the owner of the pol-
icy, the death benefit is included
in your gross estate for estate tax
purposes, and the proceeds may be
subject to estate taxes. Therefore you
should not be the policy owner.
2. D o n ’t make you r estate the
beneficiary. If you do, you’ll trigger
probate.
3. Minor children should not be
named as beneficiaries. This would
likely require court involvement to
approve the distribution.
4. Review your policies periodical-
ly, particularly when major life events
occur like divorce or the death of a
beneficiary. You also need to keep
an eye on your financial and tax
situation to ensure that your policy
continues to meet your goals.
5. If your intended beneficiaries
are very young, or of any age and
financially irresponsible, don’t make
them beneficiaries of your
life insurance. A wiser
move may be to establish
a trust for them, which
gives more control over
how and when monies are
distributed.
6. If your spouse is not
a U.S. citizen, consider
establishing a Qualified
ing him/her as the benefi-
ciary. Don’t make your non-citizen
spouse the beneficiary of your life
insurance, since doing so will proba-
bly trigger estate taxes.
7. Be sure to name contingent bene-
ficiaries in the event your first-named
beneficiary predeceases you.
8. If you purchased your life insur-
ance to fund a buy-sell agreement,
keep an eye on the policy to make sure
it keeps up with any increases in the
value of your business.
9. If you are married and you do not
have sufficient assets in your living
trust to pass on the maximum amount
of tax-free money to your heirs, you
may want to consider making your
living trust beneficiary of the policy.
10. If you are considering cancelling
your policy, consider a life settlement
rather than taking the surrender value.
In last month’s column, in dis-
cussing Joanne’s inheritance, it
said she is going to be kicked off
SSDI. That is wrong. It should
have read SSI, NOT SSDI.
Joseph S. Karp is a nationally certified
and Florida Bar-certified elder law attorney
(C.E.L.A.) specializing in the practice of Trusts,
Estates and Elder Law. His offices are locat-
ed at 2500 Quantum Lakes Drive, Boynton
Beach; 2875 PGA Blvd., Palm Beach Gar-
dens; and 1100 SW St. Lucie W. Blvd., Port
St. Lucie. Call him at 561-752-4550 (Boyn-
ton); 561-625-1100 (Palm Beach Gardens);
or 772-343-8411 (Port St. Lucie). Toll-free
from anywhere: 800-893-9911. E-mail: KLF@
Karplaw.com or website www.karplaw.com.
Read The Florida Elder Law and Estate
Planning Blog at www.karplaw.blogspot.com.