Estate and legacy planning is the worry and the plaything of the wealthy, right? Certainly the outermost layer of the onion involves trusts to remove assets from the taxable estate, life insurance and annuity funding vehicles for those trusts, trust-owned life insurance to offset estate taxes, and succession planning to compensate those both in and outside of a prosperous family business. The most obvious role of many in this industry is to advise clients on the many uses of life and annuity products in the planning process and provide the best products for those chosen applications.
Further beneath the surface are considerations for today’s ever-more-present mixed families and consideration given to children of previous marriages as well as the current, everlasting one; special needs planning with a host of intricacies and empathies mandatory to understand and embrace; legacy planning involving one time or perpetual gifting to charities or causes dear to your clients; and counsel for those left behind—the beneficiaries of your efforts to protect families from the financial hardship of the loss of a loved one.
Closer still to the core, in my belief, is disability income planning and long term care insurance—helping insure that an illness or injury won’t derail the plan due to loss of income or erosion of assets through the need to provide care.
In case there may be some doubt, I am not of the belief that the majority of our country’s financial ills could be solved by eliminating “tax loopholes” and enabling the government to seize a greater percentage of the assets of the well-to-do. I am further, oddly enough, a fervent supporter of the tax deferred inside buildup in life and annuity products. I’m on record as dismayed by the left’s attempts to demonize both the insurance and financial planning industry, and the wealthy who have fairly employed countless millions and seen the profit from their initiative, intelligence, courage and capital. I’m a big fan of the quote widely attributed in one form or another to Margaret Thatcher: “The trouble with socialism is that you eventually run out of other people’s money.”
I believe the less-than-affluent are in need of estate planning as well. The vast majority of Americans will not reach the maximum federal estate tax exemption amounts with their estates. They won’t need trusts for the purpose of removing assets for tax purposes. But their heirs are arguably even more in need of life insurance proceeds—to retain a home, see college plans to fruition, allow a spouse to raise children and enjoy a perhaps moderate but enjoyable standard of living. A significant percentage of these parents will have special needs individuals who will, in all likelihood, outlive them.
According to the LIMRA Life Insurance Awareness Month 2014 Fact Sheet, fewer than half of middle market consumers have individual life insurance coverage. Only 44 percent of those who don’t have it say they need it. Further, only one-third of adults say they have someone they consider to be their agent or financial advisor.
Forty percent of those surveyed say they are prompted by life events to consider life insurance coverage—marriage, divorce, birth or adoption of a child, or experiencing the death of a relative or close friend. Life Happens (www.lifehappens.org) gives multiple examples in which that last consideration is based on the hardship that befalls those families without life insurance coverage in place.
Approaching the holiday season, I propose a new life event to add to the above list: Time spent with family and friends—or perhaps in service to a cause they embrace—during the holidays presents the opportunity to reflect on how dear these people and organizations are to your clients. Is this not the perfect time to remind them to protect those who mean the most to them by purchasing life insurance coverage? Perhaps not the “sexiest” gift, but a heck of a lot better than a vacuum!
For my part, I wish you a very Merry Christmas. But whichever is your personal time of spiritual celebration, I wish you joy and the humble appreciation of friends and family who gather around you and of the causes dear to your heart—this is the legacy that truly matters. [SPH]
