Apr 1, 2011 12:00 PM

Now's a good time to determine whether it should be treasured, tweaked or tossed

By Charles L. Ratner

Among other perplexing issues facing clients these days is what to do with life insurance policies that are calling out for attention, sometimes very loudly. Clients might be hearing that they need to increase their premiums to support the death benefit. Or, they're being told that they need to extend liberally the number of years that premiums will be required before their policies are self-sufficient. Many are finding that their latest policy illustrations are projecting significantly less death benefit than they were anticipating for income replacement or estate liquidity needs. Others are seeing projections of far less cash value than they had been anticipating and planning on for retirement. As a result, a lot of personal financial planning and estate planning that was carefully predicated on a number of things going right, now has to be revisited. And the recent changes in the estate and gift tax laws, which may or may not be permanent, will certainly require extended visiting hours.

While this kind of news is never welcome, it's coming at a particularly inconvenient time for many clients whose cash flow, whether from earned or unearned income, is constrained by a number of forces that aren't expected to abate any time soon. And even when cash flow isn't constrained, those increased or extended premiums on trust-owned policies can be creating pressure from a gift (or generation-skipping transfer) tax perspective. In other words, the client may have plenty of money, but those increased or prolonged premiums are threatening to exhaust the client's exemptions, something that was never anticipated when the client's trust purchased the policy.

Topics of Interest

Estate Tax	Donor Advised Funds
GSTs	Family Offices
Private Foundations	Life Insurance
2010 Tax Act News	Industry Trends Surveys

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Topics of Interest

Estate Tax	Donor Advised Funds
GSTs	Family Offices
Private Foundations	Life Insurance
2010 Tax Act News	Industry Trends Surveys

E-Newsletter Signup

2011 Trust Glossary

Click here to download the 2011 Trust Glossary

50 Years Ago This Month

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50 years ago, in May 1962, we featured articles such as: "Future of Canadian Trusteeship" by Arthur H. Mingay", "Training Trust Employees" by Ian M. Marr, "What is a Trust Officer?" by Eric J. Brown, and "Selling Services" by Donald I. Webb.

Conrad Teitell's Guide to Tax Benefits For Charitable Gifts

Click here to view the most up to date guide (September 2011)

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