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WE WILL REVIEWSOME SCENARIOS FOR WRITING A MILLION DOLLAR POLICY. THINK ABOUT THIS!You as Profesional Financial Advisor, you are Suppose to Know: (1) Everything about your Clients Financially, Including; Estate Size, Value of Assets Owned, and Estate Planning in Place or Not in Place; .
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1. How to Write a One Million Dollar Life Insurance Policy at Least Monthly, and Avoid Getting Sued!
2. WE WILL REVIEW
SOME SCENARIOS
FOR WRITING
A MILLION DOLLAR POLICY
3. THINK ABOUT THIS!
You as Profesional Financial Advisor, you are Suppose to Know:
(1) Everything about your Clients Financially, Including; Estate Size, Value of Assets Owned, and Estate Planning in Place or Not in Place;
4. (2) You May have even done the Clients Life Insurance for Years;
and
(3) You May Have Had this Information in Your Files for Quite Some Time Now!
AND YET
5. YOU FAILED TO RECOMMEND THAT THE CLIENT SEE AN ASSET PROTECTION ESTATE PLANNING LAWYER TO COMPLETE AN ASSET PROTECTION ESTATE PLAN THAT AVOIDS ESTATE TAXES, LIVING & DEATH PROBATE, AND CREDITORS!
6. THIS FAILURE WILL GET YOU SUED
BY:
(1) YOUR CLIENT WHEN HE GETS SUED BY A CREDITOR!
7. THIS FAILURE CAN GET YOU SUED
BY:
(2) YOUR CLIENTS SPOUSE, WHEN SHE HAS TO GO THROUGH LIVING OR DEATH PROBATE WHEN YOUR CLIENT BECOMES INCOMPETENT OR DIES!
8. THIS FAILURE CAN GET YOU SUED
BY:
(3) YOUR CLIENTS KIDS, WHEN THEY GET HIT WITH A LARGE PROBATE FEE AND ESTATE TAX BILL WHEN YOUR CLIENT OR THE SURVIVING SPOUSE DIES OR BECOMES INCOMPITENT!
9. THE SECOND FASTEST GROWING AREA OF LAW SUITS AGAINST CPAs AND FINANCIAL ADVISORS IS THE
THE FALIURE TO RECOMMEND ESTATE PLANNING!
10. DO I HAVE YOUR ATTENTION NOW!
THE MOST IMPORTANT PART OF FINANCIAL PLANNING IS
ESTATE PLANNING!
11. A $1,000,000 POLICY COULD PAY OUT
UP TO $500,000 IN
ESTATE TAXES AND EXPENSES!
THEREFORE THE CLIENT WAS PAYING THE PREMIUMS ON A $1,000,000 POLICY, BUT REALLY ONLY HAD $500,000 OF NET COVERAGE!
12. A $1,000,000 POLICY COULD PAY OUT
UP TO $500,000 IN
ESTATE TAXES AND EXPENSES!
THEREFORE THE IRS WAS A HIDDEN BENEFICIARY OF THE PROCEEDS,
BECAUSE YOU FAILED TO HAVE AN ILIT ESTABLISH!
13. A $1,000,000 POLICY COULD PAY OUT
UP TO $500,000 IN
ESTATE TAXES AND EXPENSES!
WHO SHOULD PAY FOR THIS LOSS?
YOU AND YOUR E&O CARRIER!
14. WHEN DESIGNING
A MILLION DOLLAR POLICY
FOR YOUR CLIENT,
IT IS VERY IMPORTANT
TO KNOW HOW THE OWNERSHIP
AND BENEFICIARIES ARE STRUCTURED TO AVOID ESTATE TAXES, LIVING PROBATE AND DEATH PROBATE !
15. WHO SHOULD BE THE OWNER AND APPLICANT OF THE ONE $1,000,000 POLICY?
(1) An RLT if the Policy Proceeds will not cause Estate Taxes; or
(2) An ILIT if the Policy Proceeds Could Cause Estate Taxes in the Insureds Estate.
16. PROBABLY THE EASIEST SALE
OF A LIFE INSURANCE POLICY
WILL BE TO
REPLACE AN EXISTING POLICY THAT WAS IMPROPERLY SOLD WITHOUT ESTABLISHING AN ILIT!
17. MAKE SURE THAT THE CLIENT KNOW THAT WITHOUT ESTABLISHING AN ILIT HE HAS BEEN PAYING THE PREMIUMS ON A $1,000,000 POLICY, BUT ONLY HAS ABOUT $500,000 OF NET COVERAGE!
18.
BY ESTABLISHING AN ILIT YOU CAN REPLACE AN EXISTING POLICY!
WITH AN NEW POLICY THAT IS HALF THE PREMIUM COST OF THE PRESENT NET COVERAGE OF $500,000.
OR
19.
BY ESTABLISHING AN ILIT YOU CAN REPLACE AN EXISTING POLICY!
WITH AN NEW POLICY THAT HAS THE SAME PREMIUM COST OF THE PRESENT POLICY, EXCEPT WITH TWICE THE NET COVERAGE, OF $1,000,000.
20.
DO A POLICY SERVICE AUDIT
OF YOUR CLIENTS
EXISTING LIFE POLICIES.
21. FIND OUT
WHO IS THE OWNER?
WHO IS THE PRIMARY BENEFICIARY?
WHO IS THE CONTINGENT BENEFICIARY?
22. WHAT WOULD HAPPEN IF OWNER DIES OR IS INCAPACITATED?
WHAT IF THE NAMED BENEFICIARY IS DECEASED or DISABLED?
WHAT IF NO BENEFICIARY IS NAMED?
WHAT WOULD HAPPEN IF THE INSURED AND SPOUSE DIE AT THE SAME TIME?
23. THE POLICY WILL BE A PROBATE ASSET!
AND WHOSE FAULT IS THAT?......
YOURS, AND YOU WILL BE SUED FOR THIS FAILURE!
24. WHAT ARE THE EXPENSES
AND TAXES
UPON THE DEATH OF
OWNER AND/OR SPOUSE?
25. WHO KNOWS WHAT THE ESTATE TAXES WILL BE WHEN THE INSURED OR SURVIVING SPOUSE DIES??
I DONT KNOW, BUT WE HAD BETTER PLAN FOR THE POSSIBILITY!
26. WHAT HAPPENS IF THE BENEFICIARIES
ARE MINORS OR INCAPACITATED ADULTS?
THE PROCEEDS ARE PROBATE ASSETS!
27. WHO IS GOING TO PAY FOR THE COST OF A LIVING PROBATE OF THE PROCEEDS?
YOU AND YOUR E&O CARRIER!
28. MOST PROFESSIONAL LIFE INSURANCE SALES PEOPLE
WILL REPLACEMENT AN OLD IMPROPERLY OWNED POLICY
WITH A NEW PROPERLY OWNED POLICY!
29. THE CORRECT WAY TO SELL
A MILLION DOLLAR POLICY
IS TO FIRST SET-UP AN
ILIT
(Irrevocable Life Insurance Trust)
30. WHAT ARE THE RULES OF IRC SEC. 101(a) and IRC. SEC. 2042?
WHAT IS THE
THREE YEAR RULE OF
IRC SEC. 2035?
31. IRC SEC. 101(a)
Life Insurance Proceeds
Paid by Reason of Death of the Insured, are not Income Taxable, so long as there has not been a Transfer for Value, with some exceptions!
32. IRC. SEC. 2042
The Value of Life Insurance Proceeds are Includable in the Value of the Insureds Estate, if the Insured had any Incidents of Ownership or the Proceeds Benefited the Estate.
33.
IRC SEC. 2035
Will include the Value of the Proceeds in the Value of the Insureds Estate if the Policy was Transferred by the Insured within 3 Years of Death
34. WHAT WILL AN ILIT DO
FOR THE SPOUSE
AND MINOR CHILDREN?
35. WHAT WILL AN ILIT DO
FOR YOU!
NOT ONLY KEEP YOU FROM BEING SUED, BUT ALSO MAKE YOU THE HERO!
36. KEY OWNER OR
KEY PERSON
LIFE INSURANCE,
WHAT IS IT?
37. WHY DO PARTNERSHIPS, CORPORATIONS OR LLCs
SET UP KEY OWNER / KEY PERSON
LIFE INSURANCE?
TO COVER THE LOSS OF THE KEY OWNER / KEY PERSON.
TO FUND A BUY-SELL AGREEMENT OR A BUSINESS TRANSITION PLAN.
38. FOR A BUY-SELL AGREEMENT OR A BUSINESS TRANSITION PLAN
WHO SHOULD BE THE POLICY OWNER?
A TRUST CREATED BY THE PARTNERSHIP, CORPORATION OR LLC.
39. FOR A BUY-SELL AGREEMENT OR A BUSINESS TRANSITION PLAN
WHO IS THE INSURED?
THE KEY OWNER / KEY PERSON
40. FOR A BUY-SELL AGREEMENT OR A BUSINESS TRANSITION PLAN
WHO SHOULD BE THE BENEFICIARY?
A TRUST TO HOLD THE ENTITY OWNERSHIP INTEREST THAT WILL BE EXCHANGED FOR THE PROCEEDS TO
FUND THE BUY-SELL AGREEMENT OR
THE BUSINESS TRANSITION PLAN.
41. WHY SHOULD WE USE A TRUST?
TO MAKE SURE THAT THE ENTITY OWNERSHIP INTEREST IS EXCHANED AND THAT THE PROCEEDS:
ARE USED TO FUND THE PLAN; AND
TO AVOID PROBATE;
TO AVOID AMT;
TO AVOID ESTATE TAXES.
42. WHAT ARE
THE DIFFERENT WAYS
TO PAY FOR
LIFE INSURANCE PREMIUMS?
43. EXAMPLES ON FUNDING
LIFE INSURANCE:
SEC 162 EXECUTIVE COMPENSATION
412(i)
GIFT OF CASH TO THE ILIT
PREMIUM FINANCE
44. RECOMMENDATIONS
TO SELL $1,000,000 POLICES:
DO LIFE INSURANCE AUDIT ON CLIENT AND YOURSELF AND FAMILY. DO YOUR OWN ESTATE PLAN!
FIND A BOARD CERTIFIED TAX & ESTATE PLANNING ATTORNEY THAT YOU LIKE TO WORK WITH.
45. RECOMMENDATIONS
TO SELL $1,000,000 POLICES:
3. USE A FACT FINDER AND A POLICY AUDIT FORM WHEN YOU MEET WITH A NEW CLIENT OR WHEN YOU DO A REVIEW WITH AN EXISTING CLIENT.
46. RECOMMENDATIONS
TO SELL $1,000,000 POLICES:
4. HAVE A BRIEFING CONFERENCE WITH THE ATTORNEY, BEFORE THE ATTORNEY AND YOU MEET WITH THE CLIENT TO SHARE YOUR FINDINGS AND IDEAS WITH THE ATTORNEY. SHARE EXPECTATIONS!
47. RECOMMENDATIONS
TO SELL $1,000,000 POLICES:
5. DO NOT JUST REFER THE CLIENT TO THE ATTORNEY
BRING THE CLIENT IN TO SEE THE ATTORNEY!
48. RECOMMENDATIONS
TO SELL $1,000,000 POLICES:
6. AFTER MEETING WITH THE CLIENT AND THE ATTORNEY, HAVE A
DE-BRIEFING CONFERENCE WITH THE ATTORNEY TO DISCUSS WHAT WENT RIGHT AND WHAT WENT WRONG AND TO DECIDE ON ANY NECESSARY FOLLOW UP.
49. RECOMMENDATIONS
TO SELL $1,000,000 POLICES:
BIG TICKET LIFE INSURANCE SALES PEOPLE ALWAYS :
WORK WITH AN ESTATE PLANNING AND WEALTH TRANSFER PLANNING ATTORNEY.
50. RECOMMENDATIONS
TO SELL $1,000,000 POLICES:
BIG TICKET LIFE INSURANCE SALES PEOPLE ALWAYS :
SELL THE CLIENT THEIR ESTATE PLANNING VEHICLES FIRST AND THEIR ESTATE PLANNING FUEL SECOND.
51. THANK YOU FOR YOUR ATTENTION! Arthur J. Pauly, Jr. JD
Attorney at Law
916-207-7526
artpauly@paulylaw.com
