A life insurance policy can help your family to financially navigate the difficult time they will experience when you pass away. From covering burial costs to helping the family get by until the rest of the estate becomes available, life insurance can play a vital role in your estate planning. Here are a few tips regarding life insurance policies.
- Keep your beneficiary up to date – Your life insurance policy will pass directly to the named beneficiary without going through probate, so be sure to keep your named beneficiary up to date because this cannot be contested after you die.
- There may be situations where it makes sense to make your trust the beneficiary – This is especially true if you have children under the age of 18. Sending the money directly to the trust will ensure that the funds are accessible and handled properly by your successor trustee.
- Consider whether you and your trustee are at risk of dying at the same time – Since marriage mates usually travel together, this is the most common situation. Again, you may choose to make a trust the beneficiary, or you will want to appoint a secondary beneficiary to the life insurance policy.
Estate Planning Experts in Southern California
If you are planning for the future of your estate in the San Diego area, contact Petrov Law Firm today at 619.344.0360. Our experienced estate planning attorneys can help you to choose the best way to structure your estate so that it meets the needs of your family.Read More
At Petrov Law Firm, we see each of our clients as an individual. As a result, we help you to determine what is best of you and your beneficiaries. For some families, leaving a life insurance policy to a trust as a beneficiary is a good idea. Here are a few situations where this method works well:
- Your beneficiaries are minor children – If your kids are under 18, they won’t get your life insurance policy until they come of age anyway. Having the money go directly into a trust can allow a trustee to dispense some money to the children as needed such as for new outfits at the beginning of the school year.
- You want to avoid executor and court fees – If your estate ends up in probate court for any significant amount of time, a good portion of the assets can go toward court fees and executor expenses before your family sees any of it.
- You are concerned about the simultaneous death of yourself and your beneficiary – Let’s say the person you were going to name as your life insurance policy beneficiary is someone who is always traveling with you. What happens if you die together in some sort of travel-related accident? Having the money go into a trust is a good way to ensure it passes on to your other family members.
Personalized Estate Planning in San Diego, California
Let our professional estate planning attorneys help you to determine what methods will meet your family’s needs. Call 619-344-0360 to schedule a consultation today.Read More
You may recognize some of the benefits of leaving your estate to heirs by means of a trust rather than simply executing a will. It is a great way to avoid having your funds tied up in probate battles. However, you need to understand the different types of trust.
An Irrevocable Life Insurance Trust
When you are leaving a life insurance policy to a beneficiary, you want to protect the funds from creditors. You can also add other funds to the trust besides the life insurance money. You can even designate funds in the trust to be used for paying the policy premiums while you are alive, ensuring that there is never a delayed or missed payment that could result in the policy being withheld from your family. The trust is considered irrevocable because only you can modify the trust while you are alive or your beneficiary after you pass on.
A Revocable Living Trust
This is a great way to set aside funds for loved ones while still being able to adjust the trust at any time while you are alive. You can establish a successor trustee to ensure that your beneficiaries receive the funds as directed by the trust. You can even make the trust your life insurance beneficiary. Since the trust is revocable, you can take trust distributions while you are still alive. When you die, it automatically transfers to your beneficiaries and becomes irrevocable.
Help Establishing Trust Funds in California
The estate planning attorneys at Petrov Law Firm will be happy to help you determine what sort of trust is best for you and your heirs. To learn more, you can call our San Diego office at 619-344-0360.Read More
The short answer is: It can be. The fact is that many estate planning options provide different benefits depending on your specific situation. So we prefer to offer the best options to each client individually once we have a consultation to learn about your specific needs. However, we can provide you with a few of the benefits of naming your revocable trust as the beneficiary for your life insurance policy.
- Protects your assets against the simultaneous death of your beneficiary – What if you are in a fatal car accident with your spouse who is listed as the beneficiary of your life insurance policy? Now that money will have to go through probate court to determine who it belongs to.
- Protects estate from executor and attorney fees – In California, much of your estate can end up going to the executor and the required lawyer if your insurance policy ends up tied up in probate court for a significant amount of time. There are also additional out of pocket expenses for loved ones if the life insurance is tied up for months.
- Protects minor children – Your kids won’t get the life insurance policy right away if they lose both their parents before they turn 18. You can set a revocable trust to make annual disbursements, so the kids have funds before the entire trust becomes available.
Estate Planning to Meet Your Personal Needs in Southern California
At Petrov Law Firm, we understand that each of our clients will have different estate planning needs, so rather than offering you a cookie cutter approach, we take your personal needs and wants into consideration when making recommendations. To start planning for your future, call us today at 619-344-0360.Read More
Most people will answer that question by saying, “My spouse.” That makes sense. In a marriage, if one mate dies, the bulk of the estate goes to the surviving mate. However, complications arise when both mates die at the same time or within a short period of time. How can changing your beneficiary correct these issues and provide other heirs, especially your children, with the benefits of some additional precaution?
The Primary Beneficiary – Your Revocable Trust
One way to get around these issues is for both spouses to change their primary beneficiary to a revocable trust. In case one mate dies, the other will have fast access to the trust, so changing the beneficiary doesn’t affect how soon the money is available. In the case of both mates passing at the same time, kids (especially minor children) don’t have to worry about things like not getting anything until they turn 18 or seeing the money go through probate and having to pay court fees. This also means that if only one parent passes away and the other doesn’t transfer the money to a trust right away (these things can be tough to deal with at the moment), and then the second parent passes away not long after, none of the aforementioned issues arise. All of this can be avoided by changing the primary beneficiary on the policies.
Smart Estate Planning Advice to Protect Your Heirs
The estate planning attorneys at Petrov Law Firm can help you to effectively settle your affairs in a way that will bring benefits to those who stand to inherit your assets. To schedule a consultation, call 619-344-0360.Read More
Umbrella policies are an inexpensive way to extend your insurance coverage up to a million dollars or more. Why do that? To protect your current assets and future income. In fact, an umbrella policy is an important part of an overall estate plan. Like life insurance, disability insurance, and asset management, an umbrella policy is a way to secure your future from the pitfalls of unfortunate events.
If you cause a car accident and someone dies, then you will face an extensive lawsuit. If you disable or kill a young professional, you could easily face repaying his or her future lost wages. So if your car accident means that the victim can’t work for the next 20 years, you are liable for the $1 million of future lost wages.
And where does the money come from to cover those losses? Your own wages.
First, your insurance company will pay — but only up to the policy limit. And for many people, that’s as low as $15,000. People with “good” insurance, often have $100,000 of coverage. But even with $100,000 of coverage, you would still be on the hook for $900,000. That $900,000 will come out of your own future earnings at a rate of 25% per year.
A personal injury attorney can advise you on the kind of insurance you need. For most people who are mid-career, then you will need an umbrella policy to protect you (and your family) for the future. You will have to increase your auto insurance rates to the maximum. Then, you will add the umbrella policy and have the coverage you need to protect your home and future income.Read More
No. Life insurance is designated for the beneficiaries of the policy — not the insured. So if you have a life insurance policy on yourself, you don’t (technically) have to consider it part of your estate.
However, life insurance is an important part of estate planning and you should discuss life insurance options with your estate planner. For example, you might consider buying a life insurance policy that aligns with your mortgage — so as your mortgage decreases so does the amount of the life insurance policy that would pay off the mortgage. This option is especially helpful for parents with young children. If one of the parent’s passes away before the house is paid off, then the life insurance policy ensures that the family won’t have to leave the house.
Your estate will be responsible for paying off any debts you hold as an individual. So if you have a significant amount of debt on your credit cards, in private student loans, or in business loans, then you and your attorney should discuss the best kind of life insurance to prevent your spouse from losing other assets to pay down those debts.
In addition, you need to work with your attorney to determine if any of your current assets (like investment accounts) can immediately be transferred upon your death without any impact from probate.
Debt can mean a significant burden on those left behind to pay the bills. Work with your attorney and a good life insurance agent to determine how to keep your family safe from your financial burdens.Read More
If you are over 50, you might find that life insurance is very expensive. Generally, the older you get, the more likely you will die, so the cost of life insurance goes up. However, there are several kinds of life insurance, and you might find that “whole” life insurance is the right kind for your funeral expenses.
“Term” life insurance is inexpensive and generally only good for a specific period of time — the “term” of the insurance policy. Most term policies come in 10, 20, or 30 year increments. And it costs less, because after the term runs out, you don’t see any of that money you paid into the policy.
However, with whole life insurance, the insurance policy acts like a savings account. Admittedly, the policy assumes you’ll live to be 100; and you only see the money if you live to 100. If you die before you turn 100, your family gets the entire amount of the insurance policy. But whole life insurance is expensive.
Generally, if you are over 50 and you want a policy that will cover your funeral expenses, you probably should buy a whole life insurance policy. Ask your lawyer for advice on planning for your funeral or ask an insurance agent about the best option for someone of your age.Read More
An umbrella policy is an insurance policy that brings all of your coverages up to a high amount, like $1 million. Generally, auto insurance policies max out at $500,000, so for just a few hundreds dollars per year, you can bring those limits up to $1,000,000. Basic umbrella policies will protect you from lawsuits for any accident that is your fault. However, you can add additional coverage to your umbrella policy to cover losses and damages when it’s the other driver at fault.
When you add that extra coverage, you are entitled to that $1 million of coverage when you are injured in an accident — regardless of who caused the accident. So for example, if you are severely disabled in the car accident, your lawyer can place a claim against your own umbrella policy to acquire those funds to cover your own lost wages and medical problems. The same rule applies when you die in the accident. Your survivors (spouse, children) can use that umbrella policy coverage to gain access to the wages you would have provided over the course of your lifetime.
This is an especially helpful tool when you are unable to get life insurance because of other medical problems. While the umbrella policy doesn’t provide insurance coverage if you die from sickness, you are still covered if you are in a car accident and are severely injured or die.
Using an umbrella policy to recover lost wages is an uncommon claim, but valid. Consult a personal injury attorney to determine if buying an umbrella policy could provide you with some extra coverage you need in the case of an accident.Read More