kathyae[at]webtv.net (kat)

<< <I> TTRoberts, we were talkin' 'bout estate planning and y'all suggested
whole life, fer which i was wondering the advantages and disadvantages of why
whole life fer estate planning... </I> >
Well, since you insist on a generic response . . . advantage would be that the
Death Benefit is guaranteed to be paid at the time of death and you are
guaranteed that the required premium payments are guaranteed to always be the
same. So, with whole life the predictability of it's performance is much more
certain and requires less supervision than other types. It's been around for a
very long time and well time tested.

As one might expect, when there are things that produce advantages, those same
things are also what produce disadvantages. Whole life typically doesn't have
as much flexibility as other arrangements. While there are a few little
changes you can make when the policy is in force, whole life tends to lock you
into a course of action. On the other had, being locked into a course of
action is not necessarily a "bad" thing.

Tad, thanks for the "specifics" per how to distribute the funds, plus
the investment food fer thought, fer which i will save y'all's email in
that perhaps we can discuss further... TTRoberts, we were talkin' 'bout
estate planning and y'all suggested whole life, fer which i was
wondering the advantages and disadvantages of why whole life fer estate
planning... Cal, i didn't think the question was all that difficult fer
a "professional", though perhaps like beliavsky, y'all can't decipher my
country redneck speech, though the wall street bankers don't appear ta
have a problem in doin' sooo... oh well, y'all take care now, ya
hear!...

kathyae[at]webtv.net (kat) wrote in message news:<7178-3F5FEB91-194[at]storefull-2372.public.lawson.webtv.net> ...
- quote -

The rules of English punctuation and spelling exist for a reason. The
above message would be a lot easier to read if the poster followed
those rules and also split questions for different people into
distinct paragraphs. This is a public forum, with hundreds if not
thousands of readers, and deliberate sloppiness wastes their time. I
hope Kat will be more careful in the future, but
of course that's up to her and the moderator.

kat wrote:
- quote -

A major difference is that you would be able to draw income from the
investments in the CRT, but not from the private foundation. There's
probably more flexibility in your giving with the foundation, though you
may be able to draft the CRT to have some flexibility as well. The
foundation will typically require ongoing work by you, but with a CRT
most or all of the work could be done by the charity that gets the
remainder after you die (it can be a bit like buying an annuity, but
with a charity substituted in for the insurance company).

I'll stress though that this is lawyer stuff, not easily summarized, and
there are a lot of things to consider on the setup, funding, operation
of these things. There are other ways to do it than CRT or foundation,
those are just a couple of examples. If it's of interest to you, you
might want to talk to the fund-raising folks at the charities you're
interested in, because they may be a really good source of information.
Also there are probably attorneys and accountants in your area who work
a lot with charities, nonprofits and foundations.

Good source of info on foundations:
www.cof.org

- quote -

I'd flip it around to say, if one can prosper being diversified, why be
concentrated and merely hope that strategy works? Sure, it can work, but
it adds risk that you can easily avoid. When you're undiversified it's a
lot more likely that you'll see those gains wiped out because of a
company-specific problem. Or realistically not wiped out, but left
behind when the rest of the market does better - as it did over the past
six months for example (+11% for XOM vs +27% for the DJ Total Market Index).

Also - are you sure the concentration has paid off? I find that most
investors don't actually track this. As an example, Dow Jones says that
XOM returned about 9% per year over the past five, but the DJ Oil index
returned 12.6% (ignoring dividends, though I think XOM's are average for
the sector). So I'd say, even if you like oil, why focus on just one of
the big oils?

This comes & goes of course and you may have bought at better times. But
still I can't think of any company that's so attractive it would ever be
1/2 of a portfolio, there's just too much of a risk of something going
sour. This is the company that brought us the Valdez disaster remember
(and really it seems that kind of thing could have happened to any oil
company). And again, that's 50% of your money in a sector that
represents less than 6% of the market...plenty of other profitable
investments out there.

-Tad

kathyae[at]webtv.net (kat), you asked:

<< <I> TTRoberts, tryin' to understand Y whole life, fer which the advantages R?
</i> > Can you be a little more specific with the question so I have some idea where
you're heading? Are you talking about advantages as it pertains to funding
techniques other than life insurance or the differences between WL and other
types of life insurance . . .or the advantages between one WL design and
another, or what? I ask because I don't want to write a book here. ;-)

Speaking of books, you might want to get a hold of the book The New Life
Insurance Investment Advisor by Ben Baldwin. It tends to be very helpful and a
good read for understanding many aspects of life insurance. It's written in a
style that I feel really makes it easy for consumers to better understand life
insurance and what an agent is actually talking about when addressing one's set
of issues. It's particularly good to read it (or review it as a reference)
before one is involved with an insurance agent/advisor so one can better know
if the agent/advisor is well versed in their subject matter or not.

kat wrote:
- quote -


Apparently there is where some of your problem exists.
Your reluctance to rely upon PROFESSIONAL assistance.

Generaly speaking, any attorney that advertises that he/she
is an Esate Attorney, will have the expertise to help you. In
addition, you might want to check with friends, or another
PROFESSIONAL in the area.........
Cal Lester CLU


I'm going crazy. Wanna come along ?

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Cal, i tend to just cut to the chase when talkin' with attorneys, sooo,
could ya offer some questions that might get the estate planning
attorney talking, to reveal themselves, to where i could judge their
suitability... TTRoberts, tryin' to understand Y whole life, fer which
the advantages R?... Tad, a private foundation fer several charities and
the charitable remainder trust might be good fer the exxon stock, though
what might be advantages / disadvantages when comparing both?... and
Tad, if one can prosper bein' concentrated, Y diversify and merely hope
that strategy works?... i've always been concentrated in oil, investing
per the boom to bust cycle that repeats itself again and again and
again... two other segments, technology and medical, well represented,
though these two segments R much more volatile... and i invest in good
quarterly earnings companies, with nooo regard to their segment, thus
i'm all over the board with these...

kat wrote:
- quote -

You can state charitable contributions in a will, but there are many
other ways of doing it. For example you can create a living trust with
the charity(ies) as one of the beneficiaries...this avoids some of the
costs associated with wills/probate, and unlike with the will, keeps
your total assets private, which you may or may not want. That doesn't
come with any during-life tax advantages though, and that's where some
of the fancier things come into play.

A private foundation is essentially your own personal/family charity
that you set up, fund, and oversee...it's a way of giving money to
charity but having a say in how the funds are distributed. For example
you might want to set up a scholarship program at a local high school,
funded by the Kat Foundation. You'd set up KF, make donations to it
(appreciated stock of course), and then KF funds the scholarships. This
allows more involvement in the giving process while retaining the
charitable nature of your gifts. Ideally you need to plan out your
contributions to maximize the tax benefits...there are limits on how
much you can deduct each year for contributions to private foundations.
But as with any charity, you can donate appreciated stock and avoid any
tax on those gains, maximizing the dollars available to the charity.

A charitable remainder trust is essentially a wrapper that holds some of
your gifted assets, which allows you to draw income from those assets
during your lifetime. After death the assets pass to the designated
charity. CRTs can be appropriate for people who are certain they want a
chunk of their assets to go to charity, but for whatever reason they
don't want to make the full contribution outright, and want to be able
to draw income while they're alive.

Everything above requires involvement of an attorney, that's just the
general overview. Realistically private foundations & CRTs make sense
only when you're gifting larger amounts of money, and when charity is a
priority.


Tad, the microsoft is 'bout five % of the portfolio, though
- quote -

Separate issue there...50% of a portfolio in a single stock or sector is
an awfully concentrated position - it adds some easily-avoided risk. You
know that, but my assumption is that any company in any sector has the
potential to be the next...uhh...Valdez disaster. And of course sectors
are a lot more volatile than the overall market. So why load up?

Even if you wanted to stay in the oil sector, you might consider
diversifying more, whether it means buying other issues or buying a fund
that itself holds a bunch of energy companies (eg ticker IYE). But even
that avoids the bigger issue which is that half the portfolio is in a
single sector, one that represents less than 6% of the S&P 500. That
leaves you uninvested in the other 94% of the market.

-Tad

kat wrote:
- quote -


Cal, what should i look fer in that
- quote -

Experience, professional standing, ability to communicate
Cal Lester CLU



Everyone should have a spouse, because there are a number of things
that go wrong that one can't blame on the government.

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On 7 Sep 2003 22:30:05 GMT, kathyae[at]webtv.net (kat) wrote:

- quote -

snip

It varies by the person's lifestyle, marital status, health status,
children, etc., none of which we know about you. (Excuse me, I meant
to say "know about y'all". <grin> )

Absent that specificity, I am of the school that says young people
like you frequently are ill-served by suggestions of anything
irrevocable like gifts, trusts, etc.

You sound like you love your life, so my reaction is... what's the
rush? Get your will, etc., up to snuff then chill. Nobody knows what
you or the tax code will be like when you get older anyway.




-HW "Skip" Weldon
Columbia, SC

kat wrote:
- quote -

Kat-
If your goal is to give your assets to charity, the estate tax question
goes away. There's no estate tax on amounts given to charity at your
death. As long as you give away your assets, there won't be any estate
taxes.

And there's no limit on the amount you can give to charity while you're
alive, though there are some limits on the tax deductions you can get
for that giving. So it's a matter of assuring that the giving gets done,
and ideally, done in the most efficient way.

Example: awhile ago you mentioned something about getting into the
Microsoft IPO. Now maybe that's where the 8 figures (!) came from, and
you're sitting on stock with a huge, unrealized capital gain. Ten cents
a share cost, thirty bucks a share current value.

You don't want to sell that stock, because you'd trigger capital gains
taxes. Instead you want to give it away to charity, and let them sell
it. You get credit for a charitable contribution for the full value of
the stock, and the charity sells the stock immediately, gets that cash,
and doesn't pay tax on the gains because they're a nonprofit. Nobody
pays tax on the gains. So you maximize the dollars that land in the
hands of your charity, rather than Uncle Sam. (My view is that this is
the role of an estate tax - to encourage people with a lot of assets to
do this kind of giving so Uncle Sam doesn't get the dough).

So it's a question of how & when to do that giving. Maybe you want to
set up a private foundation, or a charitable remainder trust, or both,
or something completely different. If you've got eight figures you can
afford to put together a group of professionals who can guide you
through the options. Actually, I'd say - you can't afford not to...

-Tad

kat wrote:
- quote -


As I explained ealier, simply leave ALL the assets to the Spouse



in the medical
- quote -

Don't mean to be cute, but I could say the same about
the medical profession..................


and 2011 is too far off N2 the distance, fer we don't know
- quote -


Based on the above, it appears imperative that you MUST
meet with a Professional (Attorney), one schooled specifically
in Federal Estate Planning

--
How can I miss you if you don't leave ?

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TTRoberts wrote:
- quote -




Life insurance is simply a way to pay
- quote -


That is it EXACTLY. Life Insurance serves one MAIN
purpose, and that is to provide DOLLARS at a specific
point in time (usually at death), at a discount.............

Cal Lester CLU
--
How can I miss you if you don't leave ?

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kathyae[at]webtv.net (kat), you wrote:

<< <i> cal... i like that "i love you" clause in ya will!... would ya please
discuss how to limit, if not eliminate estate taxes, without buying insurance,
</i> >
I know you've directed this to Cal and he can certainly, and most likely will,
respond well. But let me comment . . .

It seems you're under the impression that "buying insurance", life insurance in
particular, that can in some way limit or eliminate estate taxes. Well . . .
it can't. But, buying life insurance can certainly increase the size of a
taxable estate if not set up properly.

The process of minimizing estate taxes comes BEFORE one considers how one might
use life insurance. Life insurance is simply a way to pay whatever taxes there
might be with leveraged money (leveraged, meaning the difference between the
death benefit and the premiums you'd pay. . . and you might include the tax
benefits too). Though I may be oversimplifying some, it's really just about
that simple. It's the estate planning before hand that tends to be the more
complex. ;-)

<< <i> fer i just can't stomach the idea of makin' an insurance company rich
tryin' to shelter "my" assets... in the medical profession of my day job, i see
insurance companies bleeding dry patients and limiting the professionals trying
to do all that they can do... </i> >
I fully understand and sympathize with your feelings on this issue. However,
it doesn't seem logical to lump ALL "insurance" into the same category. And
for financial reasons, it doesn't seem prudent to let one's emotions dictate
avoiding something like life insurance that might be most beneficial to one's
self interests. . . .???.

cal... i like that "i love you" clause in ya will!... would ya please
discuss how to limit, if not eliminate estate taxes, without buying
insurance, fer i just can't stomach the idea of makin' an insurance
company rich tryin' to shelter "my" assets... in the medical profession
of my day job, i see insurance companies bleeding dry patients and
limiting the professionals trying to do all that they can do... and
2011 is too far off N2 the distance, fer we don't know if a truck won't
hit us tomorrow... also, i like giving as much as i can while i'm still
living, thus being able to see what they do with it, thus some ideas
here could help... currently i support a homeless shelter, a home fer
unwed mothers and several soup kitchens, plus have a fund to assist
foster children... and fer assets, figure in the eight digit range...
also, important, when i do go to meet my maker, i'd prefer that there
wouldn't be a chunk of cash left, but rather that it'd all be
distributed... now, i do enjoy investing in the stock market, sooo i
still need assets available to invest... and at age 39, well 40, i have
nooo plans on retiring anytime soon, fer i luv my day job... cal?...

TTRoberts wrote:
- quote -


All of the above IS correct, PROVIDED, that they BOTH have
"I Love You Will's". That is to say that the SPOUSE is the SOLE
Beneficiary of each Decedents Estate. In that case, the value of
the Estate at the Death of the First Spouse would NOT be Federal
Estate taxable.
However, the "inclusion" of the Decedant's Estate into that of the
surviving Spouse will INCREASE the size of that Spouse's Estate,
causing potential IMMENSE tax consequences.
Cal Lester CLU



--
Everyone should have a spouse, because there are a number of things
that go wrong that one can't blame on the government.

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Suppose my wife and I each own life insurance policies on ourselves,
with death benefits exceeding the $1 mil estate exemption of 2011 and
beyond. If we named our son the beneficiary, there would be estate
taxes on the amount over $1 million when either of us die.

If I own the policy on my wife and she owns the policy on me, when I
die the policy on me will not be part of my estate, so there would be
no estate tax on the death benefit.

Thus it seems to me that each spouse owning the policy on the other
spouse can reduce estate taxes in some cases. Am I right?