Life Insurance

Solutions to Women-Specific Needs in Estate Planning

Published on: April 6, 2022 | By David W. Miller

Over time, people have recognized the differing needs individuals have when it comes to estate planning. While they may know that no two people will have the exact same estate plan, depending on the person’s livelihood, relationship with loved ones, and even their sex. This is surprising to most individuals. For example, women may have some unique estate planning needs that most men do not have. These needs extend to all aspects of the estate planning arena, including retirement needs, caretaking responsibilities, and end-of-life care. Below are some common issues that women face when going through the estate planning process, along with how life insurance may be the solution to these difficulties.

Earning Challenges

One such struggle with estate planning that women face is the earning power challenges that make it difficult to plan for retirement. Considering women still only earn approximately 82 cents for every dollar a man makes—with the amount being lower for women of color—this makes it even more essential to plan ahead for the future. Without adequate savings for retirement, women may feel they need to work even longer in order to be financially secure in their final years of life.

How to Use Life Insurance as a Part of a Houston Estate Plan

Published on: February 26, 2021 | By McCulloch & Miller, PLLC

People know the inherent benefits of having life insurance. They also know the need to have an estate plan in place. However, not many individuals know that life insurance can be utilized within an estate plan to benefit a person’s loved ones after their passing. For families in Houston, this can maximize their wealth to take care of the people they love most—even after their death. For many, the preferred method to use a life insurance policy in an estate plan is to establish an irrevocable trust, which can allow the benefit to be transferred to loved ones after the person’s death without tax implications. By creating a life insurance trust, individuals transfer ownership of the life insurance policy to the trust.

Building an irrevocable trust may seem like a complicated process, but with the help of an estate planning attorney, the trust can be created with ease. The first step is to establish the trust, where the life insurance policyholder names another party to serve as the trustee. The trustee uses the assets in the trust to pay life insurance premiums. After the creation of the trust, the trust itself “owns” the life insurance policy until the person’s death. It is important to note that the trust is irrevocable, meaning the individual cannot change the terms of the trust after it has been established.

While this option may seem strange for many, there are inherent benefits to doing so. For one, turning the life insurance policy into an irrevocable trust has a tax advantage. The proceeds that beneficiaries receive from this trust are generally excluded from the beneficiary’s gross income. Since the trust technically “owns” the life insurance policy, it is not an asset that would be taxed like normal inheritance would be. Beyond the tax advantages, a life insurance trust provides a guaranteed source of income for loved ones. As long as a beneficiary—a loved one or close friend who the individual wants to receive the funds—is named on the policy, the benefit proceeds are directly paid out to the beneficiary without going through the probate court process. This speeds up the process so the heirs can use the funds to pay for immediate costs, like estate taxes or funeral expenses—if necessary.

How Business Owners Can Use Insurance As a Houston Estate Planning Tool

Published on: September 15, 2020 | By McCulloch & Miller, PLLC

From creating a will to establishing a revocable trust, there are many tools and options available to individuals creating a Houston estate plan. However, many people are unaware of the role insurance can play in an estate plan, especially for small business owners. Many estate planning attorneys will advise their clients to obtain life insurance, if they do not have it already, when planning ahead for their future. Besides merely obtaining insurance, there are vital steps business owners should follow when creating an estate plan.

Why Purchasing Life Insurance is Vital

Nothing can replace the loss of a loved one; however, having insurance can help soften the financial blow if tragedy strikes. If the loved one was an owner of a business and the family is looking for someone else to purchase the company, an insurance policy can allow the family to take the time to transition the company during a new period of leadership. Without life insurance during this time, the family would be a majority owner in a business they do not want to run and, often, requires a more experienced person to lead.

What Should I Know about Beneficiary Designations?

Published on: February 28, 2020 | By McCulloch & Miller, PLLC

Many people have tens of thousands–even hundreds of thousands–of dollars in their IRAs. If you have an asset that large, shouldn’t you devote more effort to planning for its ultimate disposition?

A designated beneficiary is named on a life insurance policy or some type of investment account as the individual(s) who will receive those assets, in the event of the account holder’s death. The beneficiary designation doesn’t replace a signed will but takes precedence over any instructions about these accounts in a will. If the decedent doesn’t have a will, the beneficiary may see a long delay in the probate court.

If you’ve done your estate planning, most likely you’ve spent a fair amount of time on the creation of your will. You’ve discussed the terms with an established estate planning attorney and reviewed the document before signing it.

Under 40, Do I Need a Will?

Published on: February 27, 2020 | By McCulloch & Miller, PLLC

It's never too early to start estate planning. If you already have a family, getting your personal affairs in order is a must. The sooner you start planning, the more prepared you will be for life's unexpected twists and turns.

Estate planning is a crucial process for everyone, no matter what assets you have now. If you want your family to be able to deal with your affairs, debts included, drafting an estate plan is critical, says Wealth Advisor’s recent article entitled “Estate planning for those 40 and under.”

If you have young children, or other dependents, planning is vitally important. The less you have, the more important your plan is, so it can provide as long as possible and in the best way for those most important to you. You can’t afford to make a mistake.

Some BIG Estate Planning Actions for 2020

Published on: February 7, 2020 | By McCulloch & Miller, PLLC

This time of the year is a great time to revisit your estate plan, so you can ensure your legacy is protected for years to come.”

Many of us set New Year’s resolutions to improve our quality of life. While it’s often a goal to exercise more or eat more healthily, you can also resolve to improve your financial well-being. It’s a great time to review your estate plan to make sure your legacy is protected.

The Tennessean’s recent article entitled “Five estate-planning steps to take in the new year” gives us some common updates for your estate planning.

How Does Life Insurance Factor into Estate Planning?

Published on: January 27, 2020 | By McCulloch & Miller, PLLC

Some people think once the children are all grown up, with spouses and children of their own, that they don’t need life insurance. However, it can play a valuable role in protecting the family and transferring wealth.

With estate tax exclusions at levels that make them a non-issue for most Americans, the practice of purchasing second-to-die life insurance policies to prepare for estate tax costs has faded.

However, IRAs, 401(k)s, and other accounts are still 100% taxable to the individuals, spouses and their children. The stretch IRA options still exist, but they may go away, as Congress may limit stretch IRAs to a maximum of 10 years.

Why are IRA Beneficiary Designations So Important?

Published on: January 22, 2020 | By McCulloch & Miller, PLLC

If you pass away without naming beneficiaries in your will, it can create legal entanglements for your heirs.

If you decide to purchase a life insurance policy or to put some money into a new deferred annuity contract or Individual Retirement Account (IRA), you need to complete the beneficiary form.

However, Investopedia’s recent article entitled “Why Your Will Should Name Designated Beneficiaries” says that you may just name a person as a beneficiary, without fully appreciating this aspect of your estate planning.

Planning for Medical Expenses During Retirement

Published on: November 18, 2019 | By McCulloch & Miller, PLLC

The unknown about spending in retirement is not just whether it will be higher or lower, but when during the course of retirement, you’ll be spending more or less. If you downsize, housing costs will decrease, but if you travel more, recreational spending will rise.

According to a recent article from Investopedia, “How to Plan for Medical Expenses in Retirement,” healthcare is likely to be the biggest expense in retirement. A survey from Fidelity Investments found that a 65-year-old newly retired couple should budget about $285,000 for medical expenses in retirement. It is better to have the money set aside than to be surprised by the cost. That number also does not include long-term care. Depending on where you live, those costs can range from $18,720 for adult day care services to $100,375 for a private room in a nursing home.

Despite saving and preparing for retirement their entire lives, many retirees aren't mentally or financially prepared for these types of expenses. A survey by HSA Bank found that 67% of adults 65 and older thought that they’d need less than $100,000 for healthcare. However, Fidelity calculated that males 65 and older will need $133,000—and females, $147,000—to pay for healthcare in retirement.

How Life Insurance Works During Retirement

Published on: October 9, 2019 | By McCulloch & Miller, PLLC

Life insurance is a financial tool that can be as powerful during retirement, as it is during your working life. In many cases, it can be a real lifesaver for a surviving spouse.

Most of us think about life insurance as income replacement for a breadwinner’s salary. That is certainly true. However, life insurance doesn’t stop being useful during the later years, says Kiplinger in a recent article, “Don't Overlook Advantages of Making Insurance Part of Your Retirement Plan.”

The income replaceme nt function doesn’t go away during retirement. It might even be more important.