Kansas and Missouri Estate Planning

What are Some Practical "Asset Protection" Moves for Kansas and Missouri Physicians?

Lawsuits can take a toll on assets and savings.

You are a physician.

You entered the field wanting to help others.

When you were young and idealistic, you did not realize the ever present danger of malpractice suits.

According to a recent Physician Sense article titled “The Dos and Don’ts of Asset Protection for Doctors,” most doctors will be sued at some time if not already.

You should take steps now to protect your personal assets.

If you do it later, the court may rule against your actions as being fraudulent.

What should you do?

For starters, make sure you have malpractice insurance.

Many states require its doctors to carry this if they are going to practice in the state.

This insurance covers damages up to a certain amount.

You should also place money in protected accounts.

These include qualified retirement accounts like a 401(k) or profit-sharing accounts.

But laws differ by state.

For example, assets held jointly by spouses in Missouri are deemed to be held as tenants by the entirety.

In short, the law considers such assets to be owned 100% by each spouse.

The result?

A malpractice suit against the doctor spouse cannot reach the 100% interest of the non-doctor spouse.

In Kansas, your personal residence is considered your "homestead" and is protected, as is life insurance owned for at least one year.

You should also protect yourself from life issues outside of your line of work

You should have disability, auto, and homeowners insurance.

Do you have a personal "umbrella" insurance policy as part of your homeowners insurance?

If no, then you should.

Every day you work to preserve the lives of others.

Take the time now to protect you and your loved ones.

Reference: Physician Sense (August 7, 2019) “The Dos and Don’ts of Asset Protection for Doctors”

What are Some Downsides to an Inheritance?

Leaving an inheritance could be a burden to your heirs.

You have started your estate planning.

You want to leave a financial legacy for your children.

Dividing your estate equally in your estate plan seems simple enough.

According to a recent Kiplinger article titled “Are You Forcing Unintended Consequences on Your Heirs?,” leaving an inheritance may be a burden to your heirs.

No, really.

IRA burdens.

Traditional IRAs bring with them Required Minimum Distributions and taxes on distributions.

These do not disappear when inherited.

Chances are your children will not have the same tax liabilities.

After tax, some children may end up with a smaller inheritance due to their higher marginal rate.

Real estate issues.

If you have a vacation home, you may hope your children will want to keep it.

Two viable options to consider are to: 1) pass the property through a Qualified Personal Residence Trust, or 2) leave it directly to your children.

Be sure you discuss this with your children in advance.

They will need to be on board with taxes and upkeep.

Liquidating assets.

Collections, alternative investments, and real estate are often sold at auction after death.

Unfortunately, this can result in them being sold for lower prices.

The result?

Your family would be left with less.

Make plans early so as to maximize their return on your investment for your loved ones.

Life insurance mistakes.

You may have once held a life insurance policy in an Irrevocable Life Insurance Trust (ILIT).

With a higher federal estate tax threshold (i.e., $11.4 million per persons for 2019), maintaining the ILIT may be unnecessary.

There is no need to overcomplicate things for your loved ones.

However, make no moves without consulting with your estate planning attorney and your impacted loved ones who are ILIT beneficiaries.

Inefficient trusts.

A trust can be helpful when bypassing probate.

Be sure your trust meets the needs of your family.

Careless planning can create an unnecessary burden.

Discuss your plans with your heirs and an experienced estate planning attorney to create a plan (or update your current plan) to meet the needs of all parties involved.

Reference: Kiplinger (June 13, 2019) “Are You Forcing Unintended Consequences on Your Heirs?”

What Estate Planning Moves Should I Make for My Business?

Your business does not have to die with you.

You worked hard.

You built your own business.

It took planning.

It took love.

It took persevering.

Looking back, you see success.

Looking forward, you want to leave a legacy.

How do you do this?

According to a recent grbj.com article titled “Estate planning for small businesses,” estate planning is a must.

What specifically do you need?

A Last Will and Testament.

Having a last will gives you control over who gets your assets when you die.

Without a last will, your assets will be divided according to the laws of your state.

This includes your business.

If this is done, the business you built may be ripped apart and die with you.

A Living Trust.

A living trust is in some ways very similar to a last will.

It allows you to distribute assets held in the trust according to your wishes, however, it does so without probate.

You read that correctly.

Unlike a last will, the trust distributes assets titled to it outside of probate proceedings.

Keeping assets from probate will help keep your affairs private.

A trust can also make passing business assets more efficient for everyone involved.

A General Durable Power of Attorney (Financial).

Should you become incapacitated, you will want your business to carry on.

Having a general (i.e., broad in its authority) durable (i.e., continues to be effective when you are incapacitated) power of attorney, allows you to designate a trusted individual to act on your behalf financially.

This includes paying bills, managing finances, and even tending to business matters.

A Succession Plan.

Your business will not transfer itself.

You will need to create a plan for succession.

Who do you want to take over the business when you die?

Will it be one person or more than one?

Will it be a family member or an employee?

Will it be left as an inheritance or will it need to be purchased from you?

Do you want to sell it to a stranger?

Whatever you choose, it will require careful consideration.

A Buy-Sell Agreement.

Do you own the business with another person or other people?

A buy-sell agreement may be best.

This arranges for your ownership to be purchased by the other owner should you die or become disabled.

It expresses how to determine the value of your interest and how the money is to be paid to your family.

Without this, your interest will pass to your family.

If you do not want your family to have this responsibility later, be sure to have a buy-sell agreement now.

The right type of life insurance.

If you own a business, you really should have life insurance.

It may take some time for your business to sell.

The money can tied them over during this time.

If your family is keeping the business, the life insurance policy can help cover expenses and payroll during the transfer of leadership.

The money could also buy-out the shares of the other owners should this be the goal.

Do not attempt this alone.

Work with an experienced estate planning to ensure you have the best plan in place for your business and your loved ones.

Reference: grbj.com (Grand Rapids Business Journal) (July 19, 2019) “Estate planning for small businesses”

What are Some Common Financial Miscues?

Simple mistakes can be costly.

Money.

It is the cause of much stress for most people.

Perhaps this is you.

What if there were ways to set yourself up better financially?

According to a recent Motley Fool article titled “5 Money Mistakes You Probably Don't Even Realize You're Making,” there are five miscues you can stop right now to set yourself up better financially.

What are they?

Ignoring recurring charges.

When was the last time you looked over your credit card bill?

Do you have automatic charges each month?

Look at these services.

Are they necessary and relevant?

Do you still utilize them?

Many people simply forget to cancel their gym membership or unnecessary subscriptions.

Taking action now to cancel them can save significant moola.

Working too long.

How long have you been at your job?

Has your pay changed as your skills have improved since you were hired?

If yes, it may be time to look for another, higher-paying career.

Alternatively ...

Failing to request a raise.

Perhaps you are loyal and love your workplace.

You do not want to leave.

Still, you have become an efficient asset to the company.

Ask for a raise.

A recent survey from PayScale showed those who asked for a raise would receive it about 70 percent of the time.

Neglecting to review insurance.

Your insurance was great when you got it.

Insurance changes.

Your life also changes.

What may have worked well at one time may no longer be the best option.

Review your policies and shop around to see if you can save with another carrier.

For example, 15 minutes may save you ....

Avoiding estate planning.

Not having an estate plan may seem smart.

Someone else will be sorting through the mess when you die.

The issue?

Not having an estate plan will cost you more in legal fees if you die and especially should you become incapacitated without a plan.

Do not do this to your loved ones.

Meet with an experienced estate planning attorney now.

With these common mistakes in mind, take the steps to avoid such pitfalls.

Reference: Motley Fool (June 12, 2019) “5 Money Mistakes You Probably Don't Even Realize You're Making”

Do I Have Disability Protection as a "Gig Worker"?

Self-employment has its benefits and its risks.

You work for yourself.

Technically, you work for others.

You are a contract worker.

According to a recent Kiplinger article titled “If You're a Gig Worker, Here's How You Can Still Get Disability Protection,” contract workers have their own set of concerns.

What concerns?

Lack of employer benefits.

What happens if you get injured on the job?

So much for Worker's Compensation.

Nevertheless, you still have a bit of a safety net.

What is it?

The Social Security Disability Insurance program.

This is designed to help gig workers and part-time employees.

What does it do?

It provides some replacement income from the Social Security Administration.

How do you get it?

You do not need to buy it or sign up for it.

Do you pay self-employment taxes or FICA?

If yes, you are already paying into coverage.

To qualify, you need to have paid into the system for at least five of the past ten years.

If you earn at least $1,360 per quarter in 2019, you will get credit toward your disability insurance.

If you have a sever disability and cannot work for 12 months or longer, you could have access to other benefits through SSDI.

What other benefits?

These could include dependent benefits, early Medicare, and return to work support.

How long will your SSDI benefits continue?

They should continue until you reach retirement age or can return to work.

Would this damage your retirement benefit income?

It has the added advantage of protecting future retirement benefit income.

As a contractor, you can help many people.

Although the government can help provide some protections, it may be wise to seek the help of an experienced financial advisor.

Reference: Kiplinger (December 11, 2018) “If You're a Gig Worker, Here's How You Can Still Get Disability Protection”

What Should I Be Doing to Plan for Retirement?

You need to take action to have a good retirement.

Have you been daydreaming about retirement?

Can you imagine what it will be like living without the stress of work?

According to a recent Investopedia article titled “5 Things to Do 10 Years from Retirement,” you will be stressed if you do not plan well for your retirement.

In reality, you should start preparing for retirement as soon as you start working.

At the very least, you should wait no longer than the ten years out from retirement to have answers to these following questions.

What do I want from retirement?

Do you want to work in retirement, or just dial it back a bit?

What do you want each day to look like?

Regardless how those retirement days look in your mind's eye, you need to have a plan now so you know how to finance them later.

What will your monthly budget be?

Once you have a better idea of your retirement, you can decide what will be necessary to fund your lifestyle to include hobbies, health, travel, and daily expenses.

From there, you can calculate what you need each month in terms of cash flow.

How will you fund your retirement?

Look at your different accounts and savings.

These may  include pensions, Social Security, IRAs, and a 401(k).

Determine how much you will use from each source each month.

How should you adjust your investments?

As you draw near to retirement, your investments should change.

They should be less aggressive. That is a given.

You will be focusing more on retention than on growth.

In other words, in the words of cowboy philosopher Will Rogers, you will be more concerned with the return of your money than the return on your money.

Nevertheless, keeping up with inflation should be a priority.

Diversity should also be considered.

Do you need a professional financial advisor?

The answer is likely yes.

Retirement planning should be comprehensive.

Depending on your unique circumstances, it may involve such considerations as estate planning, survivorship planning, income, investments, business continuation, and inflation.

To be prepared for retirement, be sure you address these questions.

Reference: Investopedia (September 7, 2018) “5 Things to Do 10 Years from Retirement”

How do I Separate Life Insurance Facts from Fiction?

Most Americans do not fully understand insurance.

Life is full of the unexpected.

This is what makes insurance attractive.

It minimizes the risks and effects of negative situations.

Even so, many people do not fully understand how to make life insurance work best for them.

According to a recent Investopedia article titled “Top 10 Life Insurance Myths,” people tend to have inaccurate, preconceived notions when it comes to this fundamental financial planning product.

What are they?

Singles with no children need no coverage.

Even if you have no heirs, you will likely leave debts.

These include medical expenses, personal debts, and funeral bills.

Having insurance will allow for you to cover these expenses without placing the burden on your loved ones.

It would also allow you the opportunity to leave money to a beloved charity.

Insurance coverage should be two times your salary.

There is no magic number.

It will depend on your specific circumstances.

Do you have a mortgage?

Do you have other debts?

Do you have a young family that would struggle financially without your economic provision?

Would you want to provide your children with such things as braces, dance lessons, and a quality education?

The answers to these questions will impact the amount you need.

If wishes were horses, then rides would be free.

Unfortunately, horses are expensive!

Term life insurance from your employer is enough.

This is not always the case.

If you are single and live modestly, this may be the case.

If you have children and a spouse and know you will need coverage when you die, chances are you will want more protection than what your employer has provided.

The cost of premiums are deductible.

This is false.

This is only true if the policyholder is self-employed.

The coverage must also be used as asset protection for the business owner.

If both of these are true, the premiums are deductible on Schedule C of Form 1040.

I absolutely need life insurance.

While this is true for most people, it may not be true for you.

Are you free of debts?

Are your medical costs covered?

Are your funeral costs covered?

If yes, then you may not need life insurance at all.

You should purchase term insurance and invest the difference.

Term and permanent life insurance have distinct differences.

These differences could cost you in the future if you choose term over permanent.

If you are positive you will need to be covered after death, then you should seriously consider permanent coverage.

The total premium cost for the permanent life insurance could be less in the long run than term premiums.

You also may become uninsurable in the future due to a change in your health.

Remember: your health "buys" the coverage and your money just pays the premiums.

Uninsurability could be a problem if your situation demands coverage.

With permanent coverage, your coverage may be "paid up" once your "cash value" reaches a certain amount and will remain in effect until death.

Variable universal life policies are always better than straight universal life policies.

This is not always true.

Variable universal life policies often have of layers of fees for the securities and insurance parts of the policy.

Those who have straight universal policies may have a higher cash value if the variable sub-accounts within the variable policy perform poorly.

The poor market performance may require additional premiums be paid to keep a variable policy in effect.

On the other hand, fluctuations in interest rates may have the same effect on straight universal life policies.

Only the primary money-maker needs insurance.

This is false.

If the homemaker dies, you will have other costs to cover.

This could include daycare and cleaning and cooking.

Insuring the loss of a homemaker may make sense for your family.

You should always buy the Return-of-Premium (ROP) rider on any term policy.

This depends.

Some financial experts will always advise against this because it is not cost-effective.

The wisdom of this decision depends on your risk tolerance and other investment objectives.

You may do better investing the money elsewhere.

A cash flow analysis can be beneficial in this decision.

I should invest my money rather than allocating any to life insurance.

You need life insurance coverage until you reach the "breakeven point" of asset accumulation, which itself is unique to your goals and circumstances.

If you have a million in liquid assets, it may not make sense to have a million dollar policy.

If you are relatively young with minor children and a mortgage, then having no life insurance is risky.

No, actually, it is foolhardy.

If you die without a policy, your loved ones will be left with insufficient means of support after your assets have been used.

Life insurance will play an important role in the lives of most Americans.

Work with an experienced financial advisor to determine the best course of action for you and your loves ones.

Work with an experienced estate planning attorney to create appropriate trusts to protect life insurance proceeds "from" and "for" your loved ones as needed.

Reference: Investopedia (July 2, 2018) “Top 10 Life Insurance Myths”

How Much Life Insurance Do I Need?

Life insurance will be important if you have loved ones who are dependent on your income.

Are you the breadwinner for your family?

Do they depend on you to provide food, clothing, and shelter?

If yes, life insurance is crucial.

A recent Nerd Wallet article asks “Can You Have More Than One Life Insurance Policy?”

According to the article, a life insurance policy should help replace your income if you die prematurely.

Term life insurance is a good option for this.

You will purchase a policy for a specific time period.

Why only for a term?

It should be sufficient to get your family through major life events and paying off debts.

Can you have more than one policy?

Yes.

Most companies will ask questions to determine if your current coverage is already sufficient.

A few smaller policies could be better than one large policy.

This is called “laddering.”

This approach may even save you money.

It can also be beneficial if your coverage needs decrease.

Is replacing income the only reason to have life insurance?

No.

It can be beneficial for estate planning, long-term care, and helping the needs of small business owners.

Working with an experienced estate planning attorney can help you determine what will be best for your circumstances.

Reference: Nerd Wallet (September 17, 2018) “Can You Have More Than One Life Insurance Policy?”

What are Some "Surprising Gaps" in Medicare Coverage?

Medicare does not cover everything.

Medicare.

Are you expecting it to cover all of your health care needs?

If so, you are wrong.

According to a recent Kiplinger article titled “7 Things Medicare Doesn't Cover,” Medicare Parts A and B pay for medical care if you are age 65 or older, but they do not cover everything.

Most people can sign up for them three months before turning 65.

What does Medicare cover?

Part A will cover care in skilled nursing facilities, impatient hospital stays, certain home health care, hospice care, and surgery.

Part B is essentially medical insurance for outpatient care, hospice care, and preventative care.

Some medical supplies and equipment are also included.

What does it not over?

Prescription Drugs

Any outpatient drugs are not covered.

Instead, you will need to purchase either a Medicare Advantage plan or a Part D prescription-drug policy.

You can sign up for these when you enroll.

You can also update these policies during open enrollment.

Long-Term Care

Yes.

Medicare will cover some skilled nursing with limitations.

Custodial care is not covered.

What does this mean?

If you need help with daily tasks like bathing or dressing, Medicare will not cover these costs.

Instead, you should plan ahead and purchase a long-term care insurance policy or make other arrangements to cover these costs.

Deductibles and Co-Pays

Deductibles and Co-Pays are out of your own pocket.

What are these costs?

This year your Part A deductible would be $1,340 before coverage starts.

You will also be responsible for paying a portion of long hospital stay costs.

How much would this be?

It would be $335 per day for 61-90 days in the hospital.

If you are an in-patient longer than this, then you will pay $670 per day.

Medicare will only help pay a total of 60 days after the 90-day limit.

This is for a lifetime.

What does this mean?

If you stay in a hospital any longer, the entire cost must be paid by you.

Although Part B usually pays 80 percent of x-rays, lab tests, and services provided by your doctor, you will pay the remaining 20 percent after the 2018 deductible of $183.

How can you get help with the other portion?

You can get a Medigap policy or a Medicare Advantage plan.

By purchasing a Medigap policy within six months of signing up for your Part B plan, you cannot be rejected by insurers for pre-existing conditions.

The Majority of Dental Care

Routine dental care like checkup visits, fillings, teeth cleaning, dentures, or tooth extractions are not covered.

A Medicare Advantage plan does cover some costs for x-rays or basic cleanings.

Typically, there is an annual coverage gap.

How much?

About $1,500.

Another option would be to purchase a dental discount plan or another dental insurance policy.

Basic Vision Care

Typically, Medicare does not cover eye exams or glasses.

Is there an exception?

Yes.

It may cover those if associated with diabetes or after cataract surgery.

Some Medicare Advantage plans to provide coverage.

Research a plan to cover both dental and vision.

Hearing Aids

Hearing tends to deteriorate as you age.

You will need to select the right Medicare Advantage plan if you want fitting exams or hearing aids.

Other ways to help these expenses are to save money in an HSA before enrolling in Medicare.

Medical Care Overseas

Are you planning live abroad or visit a country overseas?

Medicare will not cover this.

There are limited exceptions.

An example?

You may receive coverage if you get ill on a cruise ship six hours from a U.S. port.

By purchasing a Medigap Plan C through G, M, and N, you could get coverage of up to 80 percent of emergency care abroad.

The lifetime limit would be $50,000.

You may also want to check and see if a Medicare Advantage plan covers emergency expenses abroad.

Another way to get coverage is to purchase a travel insurance policy to cover medical expenses abroad.

As you see, Medicare has its limitations.

You will need to research and plan ahead to develop a plan to meet your medical needs in retirement.

Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.

For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.

Reference: Kiplinger (May 23, 2018) “7 Things Medicare Doesn't Cover”

Why Should I Have Life Insurance?

Life insurance can be vital to providing for your loved ones.

You are going to die.

You do not know when.

It could be within the year.

It could be years from now.

You may leave behind dependents.

You will certainly leave behind burial and funeral expenses.

How will you pay for these expenses and still provide financial support to your loved ones?

According to a recent Benzinga article titled “Life Insurance Costs and Payouts at Different Ages,” life insurance is a good option.

What is life insurance?

Life insurance is a contract between you and an insurance company.

You agree to pay premiums and, in exchange, your beneficiaries will receive a lump sum upon your death from the insurance company.

Do you have options?

Yes.

There are basically two kinds of life insurance - term and whole life.

What are the differences?

Term life insurance provides coverage through a certain period.

This is useful for replacing your income if you pass away during working years.

It can allow for your family members to still make day-to-day ends meet, let alone help meet financial goals like paying for college even if you are not there to bring in a paycheck.

Whole life will not expire, as long as you pay the premiums.

With whole life you will be covered no matter when you die.

These payments are fixed and build a cash value.

What does this mean?

The value is much like a savings account and will accumulate in value over time.

Whole life plans are often used as estate planning tools to provide "liquidity" and are used as long-term income replacement.

In other words, it will last longer than the years you would be employed.

You may even be able to borrow against these policies while you are alive.

How much will you pay?

This depends.

There are a number of contributing factors.

These include your age, your lifestyle, and your health.

By purchasing life insurance you will be helping provide for your family even when you are gone and also will help relieve the financial stress of your funeral or any other bills you leave behind.

Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.

For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.

Reference: Benzinga (April 2018) “Life Insurance Costs and Payouts at Different Ages”