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Life Insurance As A Baby Boomer Estate Planning Tool





By Rod Rishel

The youngest baby boomers will turn 55 in 2019. Many of them are still in the planning stages of their financial lives – seeking solutions to longevity challenges, estate planning needs or both. Many life insurance products are designed to address both types of challenges, but leveraging these solutions in the new year may help boomers transfer their wealth successfully.

The need is critical. Forty-two percent of baby boomers don’t even have an estate plan, according to research by Other boomers have plans that are out of date. Yet, Americans are continuing to live longer and many boomers will also continue to accumulate wealth they’d like to pass to beneficiaries.

$30 Trillion Already At Stake

Boomers are the wealthiest generation in American history and are about to pass down those riches – some $30 trillion – over the next few decades. However, that exchange may not be as large as they had hoped if they don’t take the right estate-planning steps.

For boomers with significant assets, additional estate-planning needs can arise, and life insurance may be able to help. Life insurance can play an important role in providing liquidity  –cash — at death when faced with the following cash flow drains.

Final expenses. This category may be the most immediate liquidity need faced by the baby boomer client. These costs, associated directly with an individual’s death, may include end-of-life medical expenses, funeral expenses and unpaid debts.

Probate. Next, the process of probating and administering an estate can include expenses, such as attorney’s fees, executor’s fees, accountant’s fees, appraiser’s fees, court costs and other probate expenses. The larger and more complex a boomer’s estate, the more time-intensive and costly the probate process can be.

Estate taxes. Estate taxes may be problematic for a boomer’s beneficiaries because of how quickly the taxes are due after death. For example, the federal estate tax is due just nine months from the date of death and, in most cases, must be paid in cash. The current top federal estate tax rate is 40 percent.

Additionally, a state estate and/or inheritance tax may be due. The number of states that levy an estate or inheritance tax is always changing, but according to the Tax Foundation, 18 states and the District of Columbia levy an estate tax or an inheritance tax (Maryland is the sole state with both levies) in 2018. Be sure to tell clients to consult a tax expert about their own circumstances.

Estate equalization. Estates often consist of assets, such as a family business or a large real estate holding, that are difficult to divide between heirs. In such situations, there may be a desire to keep the asset whole by passing it to one heir, while providing an equalizing inheritance to the remaining heirs using cash and other property.

Business succession. The surviving owners of a business may need cash to help them buy the company from the decedent’s estate, ultimately providing the surviving heirs with needed funds. Also, the business itself may need cash to continue operating while new management and ownership changes are undertaken.

Charitable giving. The passing of assets to a charity can provide benefits for both the charity and the estate – particularly when a charitable gift helps reduce the size of the potential estate tax bill. However, an individual’s desire not to “disinherit” their heirs by giving away property may present an obstacle to strategies that could benefit the charity. Additional liquidity can help provide for that inheritance.

Why Life Insurance?

Timing. Many of the needs described are time critical and must be addressed with cash fairly quickly. Life insurance is different from other financial assets in that it provides liquidity – cash – promptly after death.

Tax benefits. Generally, life insurance death benefits are free from income tax (based on current Internal Revenue Code). If set up in a trust designed to keep the life insurance out of the estate, the life insurance death benefit can be free from estate tax as well. Again, tell clients to consult a tax expert about their own circumstances.

Helps avoid forced liquidation costs. Some clients may point out that the estate can simply sell some assets and use the proceeds to provide liquidity. However, there are three potential pitfalls to this thinking that life insurance avoids:

  1. Taxes – Depending on the assets that are liquidated and used to pay the estate tax, the sale may trigger a capital gains tax. Assets, such as real estate or stocks, often contain sizeable capital appreciation.
  2. Sales expenses – Commissions, appraisals, fees and other expenses associated with the sale of an asset will reduce the net liquid value of the asset to the estate.
  3. The “fire sale” discount – In order to generate cash when it is needed, some assets may need to be sold in a hurry. This can result in a lower sale price, especially if the market for the asset is depressed at the time of the sale.

Cost/benefit advantages. Due to the way life insurance is constructed, the death benefit proceeds generally may be larger than the premiums paid. Therefore, the death benefit proceeds may help pay for estate liquidity expenses.

A Fitting Solution

Life insurance is well-suited to provide liquidity to meet the needs of clients with large estates, making it an important consideration in boomer estate plans. And, with fewer years to establish a plan than Generation X or millennial clients, unretired boomers must have the right strategies in place.

Furthermore, as about 10,000 boomers turn age 65 each day – in addition to all those boomers turning 55 – financial professionals have seemingly unlimited opportunities to fulfill estate planning needs in the new year. But, where can your client start?

An Estate-Planning Checklist

Here are some estate-planning measures to review with boomer clients.

  • Consult an attorney who specializes in estate planning who can provide advice and draft estate planning documents and engage any other needed advisors.
  • Gather information on financial condition and future financial needs.
  • Inventory all assets, liabilities, income and expenses.
  • Determine the goals and objectives in estate planning (i.e., providing financial security for family, giving to charity, addressing potential taxation issues, etc.).
  • With qualified advisors, formulate a plan designed to accomplish the goals.
  • Ensure that the client has chosen their estate beneficiaries and, as desired, designated specific property or interests to distribute to each beneficiary.
  • Encourage the boomer to select guardians to be responsible for the care and management of any minor children.
  • Have the boomer prepare for potential incapacity by naming who will manage their property and make any needed health care decisions.
  • If the boomer is using a will, ensure that they have nominated an executor to carry out its provisions.
  • Review how life insurance solutions, including indexed universal life policies, may be leveraged in the estate plan to provide for favorite charities, surviving beneficiaries or liquidity needs of the estate.
  • If using a life insurance trust, help the boomer decide which assets will fund the trust.
  • Have a trustee named to manage the trust property and administer the trust.
  • If business interests are a part of the estate, plan for successor ownership and the disposition of the boomer’s interests.
  • Have the boomer consider making tax free gifts of up to $15,000 for single taxpayers or $30,000 for married couples (as indexed for 2018) during life by using the annual exclusion.
  • Recommend that the client select a safe, accessible place, such as a lock box or a fireproof safe, to keep all estate planning documents. Have the client notify his or her attorneys and any other interested persons (including the executor) of the location of those documents.


The Big Picture

Many boomers can expect to live long lives and have wealth to share. The help you provide them in the coming year with planning for the successful transfer of that wealth may benefit their families and favorite charities for generations to come.

Rod Rishel is chief executive officer, life insurance, for AIG. Rod can be contacted at

© Entire contents copyright 2018 by Inc. All rights reserved. No part of this article may be reprinted without the expressed written consent from

The post Life Insurance As A Baby Boomer Estate Planning Tool appeared first on InsuranceNewsNet.


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Multiple trucking violations by Humboldt semi driver noted in government report Canadian Underwriter





MELFORT, Sask. – A Saskatchewan government report says the driver of a semi-truck should not have been on the road the day he flew through a stop sign and caused a crash with the Humboldt Broncos team bus.

The report filed during the sentencing hearing for Jaskirat Singh Sidhu notes 51 violations of federal trucking regulations on drivers’ hours and 19 violations of Saskatchewan trip inspection rules.

It includes the 11 days prior to the April 6, 2018, crash at a rural intersection that killed 16 people and injured 13 others.

The wreckage of a fatal collision, involving a bus carrying the Humboldt Broncos junior hockey team, outside of Tisdale, Sask., is seen Saturday, April, 7, 2018. THE CANADIAN PRESS/Jonathan Hayward

“If Jaskirat Singh Sidhu had been stopped and inspected on April 6, 2018, prior to the incident he would have been placed under a 72-hour out-of-service declaration … preventing him from operating a commercial vehicle,” says the report.

The document is signed by two senior Saskatchewan government officials and is included in the RCMP’s forensic collision reconstruction report.

It expresses concerns about the distances Singh was driving as well as the amount of time he took off to rest.

The report notes that if Singh had accurately documented his time at work on April 1 it ‘would have resulted in the driver being in violation of the maximum on-duty time of 14 hours for the day.”

The report says questions remain about what happened the day of the crash.

“We have strong concerns regarding the timelines of Jaskirat Singh Sidhu’s day on April 6, 2018, as there are unanswered questions as a result of the incomplete log on that day,” it says.

“The identified mileage and distances required to travel to the locations identified in the log and known locations also cause concerns.”

Sidhu had been driving for about a month before the crash occurred.

The owner of the Calgary-based trucking company, Sukhmander Singh of Adesh Deol Trucking, faces eight charges relating to non-compliance with federal and provincial safety regulations in the months before the crash.

They include seven charges under the federal Motor Vehicle Transport Act: two counts of failing to maintain logs for drivers’ hours, three counts of failing to monitor the compliance of a driver under safety regulations, and two counts of having more than one daily log for any day.

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Signs of progress on national flood program for Canada Canadian Underwriter





Canada is making good progress on a national flood program, pending a final decision by federal, provincial and territorial (FPT) ministers responsible for emergency management.

“What they are looking at is one national insurance solution to improve outcomes for high-risk Canadians across the country,” Craig Stewart, vice president of federal affairs at Insurance Bureau of Canada (IBC) told Canadian Underwriter in an interview Tuesday. “There may be regional insurance pools adapted to local conditions, but it would be nationally coordinated.”

FPT ministers responsible for emergency management have mandated IBC to lead a national working group to take a look at options and what they would look like. IBC provided three options:

  • A pure market approach (like in Germany and Australia) where governments exit disaster assistance
  • A broadened version of the status quo, but with better-coordinated insurance and disaster assistance
  • Deployment of a high-risk pool analogous to Flood Re in the United Kingdom.

The next step is for the working group, which Stewart chairs, to cost out the pool. “The pool needs to be capitalized as it was in Flood Re,” Stewart said. “So, we need to figure out where that money is going to come from. Is it going to come from governments? Is it going to come from insurers? Where is it going to come from?”

A final decision will be made by ministers after the high-risk pool is costed, which Stewart expects to be completed by June. Decisions on eligibility, how to capitalize the pool, and on any cross-subsidization await the results of that costing analysis.

In addition, this spring, the ministers will hold a technical summit on flood data and science. “Our view of the risk many not align with the government’s view of the risk,” Stewart said. “We need to bridge the gap. This symposium is going to focus on essentially the data and science of flood modelling.”

In early 2020, there will be the launch of a consumer-facing flood risk portal. IBC has been working with the federal government to develop the authoritative flood portal, where consumers can discover their risks and what to do about them.

“Elevating consumer awareness of flood risk is key,” Stewart said. “Consumers aren’t going to be incented to protect themselves or to buy insurance unless they know their risk.”

In May 2018, FPT ministers responsible for emergency management tasked IBC to lead the development of options to improve financial outcomes of those Canadians at highest risk of flooding. IBC worked with a wide range of insurers, government experts, academics and non-governmental organizations to produce the three options, which were tabled with ministers last week.

The ministers released the first-ever Emergency Management Strategy for Canada: Toward a Resilient 2030 on Jan. 25. The document provides a road map to strengthen Canada’s ability to better prevent, prepare for, respond to, and recover from disasters.

“In less than two years, Canadian insurers have secured a mandate with every province and territory to finalize development of a national flood insurance solution, have successfully catalyzed a national approach to flood risk information, have secured over two billion dollars in funding for flood mitigation, and have succeeded in securing a funded commitment for a national flood risk portal,” Stewart said.

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Insurers disagree over meaning of ‘household’ in policy language Canadian Underwriter





A dispute over what exactly constitutes a “household” in a home insurance policy has reached the Court of Appeal for Ontario.

Several members of the Weiner family were sued after a person drowned in 2010 in a vacation home on Lake Eugenia, about 70 kilometres west of Barrie.

The homeowner was Enid Weiner, who had moved to a nursing home in 2008 or 2009 and has since passed away.

The home was insured by Intact. Enid Weiner was the only named insured, but the policy provided liability coverage for relatives of the named insured while those relatives were “living in the same household” as the named insured.

Whether this means Intact is also providing liability coverage for Enid Weiner’s adult son, Scott Weiner, was a source of disagreement among judges and insurers alike.

Scott Weiner, along with his wife and daughter, were named defendants in the drowning-related lawsuit. Also named was the estate of Enid Weiner. Scott Weiner used his mother’s house as a cottage but did not live there permanently.

Scott Weiner’s own insurer, TD Insurance, settled the lawsuit. TD Insurance took Intact to court arguing Intact has a duty to defend the lawsuit.

As it stands, TD has lost its case.

“The mere fact of co-residence is not enough to constitute membership in a household,” wrote Ontario Court of Appeal Justice Bradley Miller in Ferro v. Weiner, released Jan. 28, 2019.

Initially, Ontario Superior Court of Justice Pamela Hebner ruled in favour of TD. In her ruling, released Apr. 12, 2018, she ordered Intact to pay $62,500, or half the cost of settling the lawsuit.

Justice Hebner found that Scott Weiner was in the same household as his mother. He came to the cottage when he wished and took care of it as if it were his own place.

But Justice Miller of the appellate court countered that, at the time of the accident, Enid was living in a nursing home.

“Scott lived with his family in the city and had organized his life around his urban household. Prior to entering the nursing home, Enid lived with Scott’s brother, and not with Scott and his family,” added Miller, citing several court rulings, including Wawanesa Mutual Insurance Co. v. Bell, released in 1957 by the Supreme Court of Canada.

Wawanesa v. Bell arose after Murley Miller was killed in 1955 while driving a Vauxhall car owned by his brother, John Milley.  Other victims of that accident sued Miller’s estate. Murley lived at John’s home in Sarnia.

The court in the 1957 case defined the term “household” in the following way:

“The ‘household,’ in the broad sense of a family, is a collective group living in a home, acknowledging the authority of a head, the members of which, with few exceptions, are bound by marriage, blood, affinity or other bond, between whom there is an intimacy and by whom there is felt a concern with and an interest in the life of all that gives it a unity.”

Members of a household could include domestic servants and distant relatives living there permanently, the court found in 1957.

“Although a household is not synonymous with a family, the existence of a household is evidenced by the extent to which its members share the intimacy, stability, and common purpose characteristic of a functioning family unit,” Judge Miller of the Court of Appeal for Ontario wrote in 2019 in Ferro v. Weiner.

Members of a household “typically share a residence and resources, and integrate their actions and choices on an ongoing and open-ended basis,” added Miller.

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