Estate Tax Planning Question

Last Tuesday I attended a networking group for women at Zin on the lake in Westlake Village. Since we have been having mild summer weather it was a wonderful choice of locations to have a drink and mingle with the other ladies who attended.

I was listening to a conversation between one of the ladies who announced to the Estate Planning Attorney that she had recently learned there is a death tax. I like to think of it as an Estate tax as it is usually paid by very large estates. She wanted to know if there was a way around it. The Attorney explained that this year (2010) the tax on estates is nil and until Congress does something it may be based on assets over $1 million in 2011. She could reduce her estate by gifting $13,000 to whomever she wanted to.

The conversation came to mind over the weekend.

The Attorney never mentioned that one of the options available to cover the tax is having an Irrevocable Life Insurance Trust that would purchase life insurance to cover the amount of estate tax that might be owed at her death. If the premiums are large she can set up the trust with gifts to her kids or grandkids that would go to pay the premium.

An attorney knowledgeable in Irrevocable Life Insurance Trusts would need to be consulted along with a CPA and a knowledgeable insurance agent.

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SandraCherry, August 9th 2010 | Tags: , ,
Posted in Estate Planning, Financial Planning, Insurance

I.R.C. imposes 40% excise tax on certain high cost employer-sponsored health care plans

My friend April sent me an email about the Title IX: Revenue Provisions in the Health Care Bill that was passed. I was surprised at what she referred to so I went to the website, http://thomas.gov and searched for HR 3590 summary.

What I wanted was on pages 21-22 of the summary. I bet you’ll be as surprised as I was. Here is a summary of the summary.

Subtitle A: Revenue Offset Provisions – (Sec. 9001, as modified by section 10901) Amends the Internal Revenue Code to impose an excise tax of 40% of the excess benefit from certain high cost employer-sponsored health coverage. Any amount which exceeds payment of $8,500 for an employee self-only coverage plan and $23,000 for employees with other than self-only coverage (family plans) as an excess benefit. Increases such amounts for certain retirees and employees who are engaged in high-risk professions (e.g., law enforcement officers, emergency medical first responders, or longshore workers). Imposes a penalty on employers and coverage providers for failure to calculate the proper amount of an excess benefit.

As I understand this, if you are in a company plan and the company pays over $8,500 for a single individual employee that employee will be paying tax on the amount over $8,500 at 40%. Example: Company pays $10,000 for individual employee health coverage. Deduct $8,500 leaving $1,500 excess. Employee will have to pay $600 excise tax on the $1,500 calculated at 40%.

The employee that insures a family will have to pay the excise tax on the amount over $23,000 that the company pays. Example: Company pays $30,000 for a family plan. Deduct $23,000 leaving $7,000 excess. Employee will have to pay $2,800 excise tax on the $7,000 calculated at 40%.

(Sec.9002) Requires employers to include in the W-2 form the aggregate cost of applicable employer-sponsored group health coverage that is excludable from the employee’s gross income (excluding the value of contributions to flexible spending arrangements).

I don’t know if these plans apply to the average employee or to high earning executives. I guess we’ll find out when W-2s come out in 2011.

There are some other sections that relate to health savings account, Archer medical savings account, limits of annual salary reduction contributions under a cafeteria plan, etc.

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SandraCherry, June 1st 2010 | Tags: , ,
Posted in Insurance, Tax Planning

Insurance: Anthem Blue Cross delays rate increase to May 1

If you have Anthem Blue Cross and were notified that you will receive a large increase as of March 1 you are getting a reprieve until May 1.

You may have already been notified by your agent or a phone call from Anthem. An acquaintance of mine who applied and was accepted by another carrier received a phone call from Anthem about this.

I read the article in the Los Angeles Times this past Sunday and thought it interesting. Anthem says it is utilizing 70% of premiums collected to pay claims as required by law. The California Insurance Commissioner and Congress are making noise about the increases being exorbitant and are doing an investigation. Hence the reprieve.

It’s also interesting to me that when I recently did a comparison for a prospect that Anthem came in less expensive than the carrier I compared to and has a two year rate guarantee on certain plans.

We will know soon.

Don’t cancel your Anthem coverage without getting coverage with another carrier. If you need assistance, call me at 818 706-3745 or email me at Sandra@Insurance-California.com.

Sandra Cherry, PFP CA Insurance License #0B45111

SandraCherryFinancialPlanner.com

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SandraCherry, February 16th 2010 | Tags: , , ,
Posted in Insurance

Insurance–Options for Long-term care benefits

This past week I learned about a Whole Life Insurance Policy that has Long-term care benefits. The company that provides the policy is reputable so I phoned them to find out about it.

What I learned is that it is a single premium product with simple underwriting. After applying the insured receives a phone call from an Underwriter and is asked a few questions. The benefits can be used at home or Assisted Living or Skilled Nursing and there is a 90-day elimination period before the policy pays benefits. The minimum premium is $50,000.

This company also has a Universal Life Insurance Policy that the insured can add a rider to that provides Long-term care benefits. It’s a different scenario since the premium is paid over time.

Over the years I have written annuities with Long-term care benefits for clients who had health issues and would not qualify for pure Long-term Care Insurance. Annuities also require a single premium with minimal underwriting. One company has a 7-day elimination period. Far better than waiting 90-days for the insurance carrier to start paying.

The advantage to both Life Insurance and Annuities with Long-term care benefits is that whether it is used for Long-term care or not the beneficiary will receive the money not used when the insured/annuitant dies.

Call me at 818 706-3745 or email: Sandra@Insurance-California.com if you would like to discuss the possibility of obtaining quotes for yourself or a loved one.

Sandra Cherry, PFP CA Insurance License #0B45111

SandraCherryFinancialPlanner.com

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SandraCherry, February 7th 2010 | Tags: , ,
Posted in Insurance

YOUR INSURANCE AGENT MAKES THE DIFFERENCE

Some years ago I was competing with another agent for a life insurance policy for a mutual friend. He was a captive agent, he could only write a policy for the company he was associated with. Being an independent agent I shopped for the best policy at the most affordable premium for her. There was a substantial difference in the annual premium. Needless to say I wrote the policy.

Besides the difference in premium the other agent did not have the facts needed to make a quote for the prospect. His quote was for more insurance than she actually needed. The quote I provided was for the amount that her estate planning attorney recommended she get a policy for.

When you’re considering life insurance products, it’s important to choose an agent or broker who can help you. Buying insurance can be complicated and confusing. The key to buying the right amount and the right type of policy at a good rate is a good agent or broker. You should choose one who:

• Explains in terms you can easily understand, all of the issues and options available to you with your planned use of life insurance in your financial future.

• Understands your financial situation and your feelings regarding risk, your income and estate tax bracket, financial assets and liabilities, and your own personal situation.

• Doesn’t pressure you into decisions, but works with you until you come to a decision on your own about what’s best for you and your family.

• Helps you with periodic reviews of your policies and portfolios to ensure that your products continue to meet your needs and current circumstances.

• Is licensed and professionally qualified by the Dept. of Insurance where you reside.

If you want my assistance you can reach me by phone at 818 706-3745 in California or by email: Sandra@Insurance-California.com.

Sandra Cherry, PFP CA Insurance License #0B45111 (805) 374-1744
www.SandraCherryFinancialPlanner.com

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SandraCherry, January 26th 2010 | Tags: , ,
Posted in Insurance

CALPERS INCREASING LONG-TERM CARE INSURANCE PROGRAM RATES

Are you one of the 160,000 members of the California Public Employees Retirement System (CalPERS) who purchased into the Long-term care program?

Guess what? The CalPERS Board of Administration in their infinite wisdom is giving you an increase in premium effective mid-2010.

According to SellingLTC.com “All policies issued prior to 2005 with either lifetime benefits or inflation coverage will receive a 22% increase. All policies in this group with both lifetime benefits and inflation coverage will receive an additional annual increase of 5% per year beginning in July 2011. Any policy issued prior to 2005 with only non-lifetime benefits and all policies issued after 2005 will receive a single 15% increase.”

When the program became available years ago those of us selling Long-term Care insurance expected this would happen. CalPERS signed up everyone with no underwriting and very inexpensive premium. I don’t think people would actually use it. The increases are due to more usage than was expected.

If you would like to discuss options that might be available to you outside of CalPERS I am available by telephone at 818 706-3745 or by emailing:
Sandra@Insurance-California.com. Please give me your name, phone number and best time of day to reach you.

I am licensed by California Dept. of Insurance. My license number is 0B45111.

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SandraCherry, January 22nd 2010 | Tags: , ,
Posted in Insurance, Uncategorized