What Options Are Available to Help Manage Things for My Parents Who Has Dementia |Weekly Wednesday Wisdom Webinars

Certified Elder Law Attorney and Financial Advisor Chris Berry of Castle Wealth Group answers questions on retirement and estate planning every Wednesday at 1pm.

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Castle Wealth Group and Christopher Berry help families with estate planning, elder law, retirement planning, and tax planning from their offices in Brighton, Ann Arbor, Livonia, Bloomfield Hills, and Novi.



On this week’s webinar, attorney and advisor Chris Berry of www.castlewealthlegal.com answers the below questions.

  • My mother has dementia, what options are available to help manage things for her as she is getting near the point she can’t manage things herself? Do we need guardianship, or POA, or trust?
  • I created an estate plan in 2016, with the change in presidency, what things should I be concerned with?
  • I have beneficiaries listed on my financial accounts, what should I do with my home to avoid probate, name my kids?
  • The person wants to leave real estate to children with a provision that children must sell split, what estate planning device is the best?
  • Can you explain what an IUL savings account is and if it’s good to have an addition to the Roth?


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Episode Transcript

All right hello everyone so my name’s Chris Berry and we do these weekly webinars every week. Obviously, hence weekly webinar, and really these are just an open forum question and answer time. So if you do have questions please submit them ahead of time. There’s no script or anything. It’s people who submit questions during the week or submit questions as I log on here and I go ahead and answer those questions live and understand everything it’s kind of general advice. If you want to see how this applies to your situation please make sure to set up a time to have a conversation. And I always like to start with positive focus and my positive focus this week and it’s kind of an ongoing thing is just personally really enjoying coaching my kids in soccer. They’re 10 and 8 and I’m coaching along with my dad who is my coach. And we just wrapped up my son’s last game the other week and my daughter we just wrapped up her last practice and then we have her last game this Saturday and then we’re going to go into the season which starts in August.

I’m going to coach them again so really enjoying that. So that’s my positive focus plus the amazing weather and summer finally kind of hitting us and a great memorial day that I spent with my family and my parents and we had the classic memorial day hamburgers and grilling outside. Thankful for everyone’s service and what that day means. So with that, we’ll go ahead and get started. Like I said if you do have questions please put them into the question-answer section or into the chat and I will answer it as we go. So we do have three questions that are submitted ahead of time and then someone else just submitted another question. So I appreciate that so a lot of these were estate planning questions. This week apparently and then yeah okay so my mother has dementia what options are available to help manage things for her. As she’s giving you a point where she can’t manage things herself do we need a guardianship power of attorney or a trust. 

So the issue is you know we have mom here and we have to figure out how, do we kind of manage things for her and really there are two things that have to be managed. One is kind of financial decision making and then the other is whoops I don’t know what I’m drawing there the other is medical decision making. So making decisions with regards to her money and then making decisions with regards to her care and understand we don’t go from healthy to completely incapacitated these days. Especially as we’re living longer dementia Alzheimer’s are bigger concerns and uh there’s no like hard-line rule. It’s really difficult for families to figure out when is the right time to get involved in terms of managing things. But there are certain tools that we need to use. So the first thing would be a financial power of attorney and medical power of attorney. 

Now with this financial power of attorney typically we’re doing it so it’s effective immediately. So that we don’t have to have like two licensed physicians sign off to say that someone’s incapacitated. Instead, we set it up so that it’s effective immediately. Just because a lot of times what happens is mom while not completely incapacitated wants someone to help out with things. So she can still manage things and then the person you’ve appointed as a financial attorney can help manage things as well. So a lot of times we’re doing that immediate financial power of attorney. The medical power of attorney really only kicks in if you are incapacitated and that’s just by statute. So these two are very important really everyone over the age of 18. Should have those two documents the financial and medical power of attorney appointing someone to make decisions. You never know when life’s going to throw you a curveball now also we have a trust. So a trust depending on the type of trust the trust it’s almost like a piggy bank right where we can put assets. This is me drawing a pig by the way and I’m a much better attorney and adviser than I am an artist. I don’t understand my kids draw better than I do. So that’s a piggy bank by the way. So we can have things in the piggy bank like a home or investment accounts. Now, who manages that trust or that piggy bank. There are a couple of roles that have to be filled and the first role is the grand tour. So in this situation, mom would have been the grand tour. She’s the one that created the trust or would create the trust. The second role is that of a trustee who’s in charge of the trust who’s managing the piggy bank and then the third role is who’s the beneficiary of the piggy bank. So one thing we could do is we could have okay mom creates the trust but maybe it’s the daughter who’s managing things and it’s not just upon death. 

It could also be while mom’s alive and so the role of the trustee controls or manages the assets inside of the trust. So if we have concerns about mom managing things then we could set up a trust and just appoint someone else’s trustee to manage the assets and the trust and then along with that the financial power of attorney would manage any assets outside of the trust. So inside of the trust might be investments real estate. Outside of the trust managed by the financial power of attorney would be like a checking account or maybe a small savings account. Where it’s in mom’s name or yeah mom’s name in this situation but someone else can manage it. Now understand that the financial power of attorney here’s a negative it does not take away mom’s ability to manage her own affairs doesn’t take away it doesn’t take away her independence. So if she’s out there making poor choices. And I’ve had this come up before where I had a client he was an engineer who suffered from dementia had a saved up a lot of wealth but started making really poor choices with it where about 600 000 was like sent overseas. He thought it was a good investment but he basically got scammed. 

So a financial power of attorney is not going to protect against those things that’s where the trust can protect against those things. So if we have concerns about mom’s dementia and we’re concerned about things like scams or her giving money away inappropriately then maybe we want to create a trust and appoint someone else as a trustee to manage it. So trust not only deal with after or deal with issues upon death but can also be structured to deal with issues while you’re alive. Whether it’s concerns about managing money or of course we talk about protection of assets and protection against long-term care costs. Now we also have this thing of a guardianship. So this would be going to court petitioning the court to basically sue mom to say that she can’t take care of herself. So the advantage of this is that this does uh protect her from kind of her own poor choices. So it does protect against things like scams and that type of thing but the downside of this is is now you have the courts involved. So it’s a court process and now a judge is going to oversee everything and a judge is going to okay or say you can’t do certain things. So now you owe an accounting to the courts on an annual basis and again it’s a court process.

You’re basically taking mom to court where you petition the court. Now the the judge or the court will appoint what’s called a guardian ad litem basically independent eyes the judge will appoint a lawyer to represent mom because again this is the US where we value independence. So a guardianship you’re really taking away someone’s independence. So I really don’t like to go this route unless we really have to. Instead, I’d much prefer trying to take care of things through financial medical powers of attorney or potentially setting up a trust to limit access if need be. So those are kind of the tools that we would use financial powers of attorney medical powers of attorney trusts really the I call it a nuclear option. It’s the last option would be going that guardianship route and there’s a lot of you can get advice from a lot of different places but and you talk to a lot of people and they’ll recommend going to get a guardianship again that’s probably the last thing I would recommend. Try all the other avenues first before you go the guardianship route. All right let’s see so that was question one let me see what else we have all right okay all right. I see the questions submitted I’ll get to those let me take care of the ones that were submitted ahead of time all right. So I created an estate plan in 2016. We have had a change in the presidency obviously. What things should I be concerned with? Well, let’s just kind of go through history what’s happened. So 2018 we had something big called the tax cuts and jobs act and we’ve talked about this before but really what this is affecting mostly is taxes and what it did is during this time period from 2018. It’s scheduled to one run to 2025 basically it’s lowered taxes marginal tax rates across the board. 

So if you were at the 22 or if you’re at the 24 tax bracket. It’s been lowered to 22 during this time period and then it’s going back up to 24. Okay if you’re at the I’m sorry the 25 if you’re at the 24 tax bracket or I’m sorry if you were at the 28 tax bracket previously it’s lowered to 24 and then it’s scheduled to go back up to 28 percent with regards to. So that’s more of an income tax issue. So we’ve talked a lot about moving money out of the IRAs paying the taxes moving it to Roth or IUL or somewhere else. And we have this window of opportunity from 2018 to 2025 unless President Biden changes that and he’s talked about that the other thing is with regards to estate taxes. So with the tax cuts and jobs act what happened is the estate tax exemption went to 5 million.

It was 5 million prior to the tax cuts and jobs act than with the passage. So during this period from 2018 to 2025 at least as scheduled individual estate taxes moved up to 11 million dollars. So as long as you pass away with less than 11 million dollars you owe zero estate taxes but then when the estate tax exemption or the tax cuts and jobs act expires then it’s dropping back down to five million dollars for an individual. Now by President Biden has proposed lowering that even further to three and a half million dollars. So if you were to pass away with more than three and a half million dollars then potentially 45 percent of that could be eaten away and go to estate taxes. So if you do have a larger estate that’s something you need to become concerned with. So if we did an estate plan taking into account that estate tax exemption was higher and now it’s lower and you get bumping up to that estate tax. There might be some things that we need to do sooner rather than later to address that and then so that was 2018 then 2020. 

We had the secure act and the secure act did a couple of things first of all it pushed back your required minimum distribution age from 70 and a half. So if you have IRAs now that you had to pull out about 3.65 at age 70 and a half now that number has been pushed back to 72. Which in my eyes is kind of pointless and in fact especially given that we know taxes are going up it’s almost more harmful to delay pulling money out of those IRAs. But the real reason they pushed past the secure act is that when you inherit an IRA you used to be able to stretch out you could stretch out the required minimum distributions. So prior to the Secure act when you passed away and you left an IRA to say kids didn’t have to pay all the tax at once they could stretch out the taxes over their lifetime. That’s what’s called a stretch IRA but the secure act basically killed off those stretch IRAs. Now we can only stretch it up to 10 years and this is both for pre-tax IRAs as well as Roths. Roths you can leave tax-free to the next generation but they have to take it out of the tax or out of the Roth within 10 years.

So depending on how you’re if you have an estate plan and you have a trust and you named IRAs to the trust you need to be we need to make sure the trust is still in line with this new secure act. All of our estate plans were we didn’t have to make updates or changes but depending on the kind of strategy we might have made changes. So that was the big one those are the big things with regards to estate planning. And I’ll and again it’s more it’s not like every estate line has to be updated because of this. It’s just these are the things that we need to think about. If your estate plan is older than 2012 I can tell you without looking at it there was a change in the law with regards to your financial powers of return. So if you’re listening to this and you have a state plan and solar then in 2012 at least a part of that estate line has to be addressed but with a change in presidency, there hasn’t been a lot of changes with regards to estate planning. A lot of it has been geared around taxes and really there are three taxes that we need to that I’ve been talking to people about first is the income tax. So if you do have pre-tax dollars like IRAs or 401ks. Let’s say you have more than 250 000 in that pre-tax bucket. We might want to look at some strategies to mitigate taxes in the future.

Second is we have to be cognizant of the estate tax.So if your net worth you add up the value of your home and your life insurance and your business if it’s greater than three and a half million dollars. There are some things that we need to be concerned with regards to estate taxes and then this is a big one I was talking to a client yesterday who had about 1.4 million dollars of taxable like stock. The big thing we have to be concerned with now with president Biden and his new proposal is step up in basis and this is a little bit confusing but think of it like this you buy an investment for a hundred thousand dollars at date of death. It’s valued at 200 000 and then the kids sell it let’s say at 250. What are the gains on that what would be the potential taxes or the gains? Well, right now we get a step up in basis meaning that the tax with the step up is just the difference between 200 and 250. Well, president Biden’s proposal has said we’re going to get rid of this step-up in basis and now when the kids sell it for 250 they’re going to have to account for 150 000 worth of capital gains. 

So I call this a stealth tax like it’s not on its face raising taxes but it is raising tax revenue in a very kind of sneaky way because a lot of people haven’t even heard of step up and basis in the first place. So really with the change in presidency not only the change in presidency also the fact that we’re about 30 trillion dollars in debt as a country prior to president Trump getting in office. We’re about 22 trillion dollars in debt and then with the pandemic and everything now we’re 28 trillion and approaching 30 trillion dollars in debt as a country. So really the biggest thing from a planning standpoint is taxes and relating it back to kind of estate planning or let’s call this just kind of legacy planning. Like if we’re talking about leaving assets to the next generation we need to understand these different tax brackets or tax buckets. So having taxable accounts now that’s going to be affected by step up and basis tax-deferred.

This is where if income taxes go up the value of IRAs and 401ks go down and then the tax-free bucket and so really a lot of like the estate planning conversations aren’t about like the trust needs to be updated. It’s let’s move assets from tax-deferred to tax-free and then uh-oh now we have to also worry about step-up and basis. Let’s move money from the taxable account to that tax-free bucket and this is where we get into tax-free things or things like Roths which are not estate tax-free actually but cash value life insurance IUL 529s health savings accounts and really of these if you’re really concerned about things like estate taxes income tax and step-up and basis. A lot of this is moving to things like life insurance as a way to leave money to the next generation because we can do it in a completely tax-free manner. Okay, so long story short like the legal structure of the trust might have to be reviewed. Really the big reason might be the stretch IRA and the secure act but really there haven’t been any changes in the law that warrant a change to the legal structure. It’s more of uh just looking at our strategies. So the tool, The trust, The tool itself that’s okay most likely but we might want to readdress what are our goals and develop a better strategy. Especially given this tax conversation that needs to be had these days but again taxes are I think one of the biggest risks right now and also the biggest opportunities.

There’s a window of opportunity to take advantage of some of these strategies. Number three I have beneficiaries listed on my financial accounts. What should I do with my home to avoid probate should I name my kids. Well, when someone passes there are four ways assets transfer. One would be joint ownership but I would never recommend naming your kids to join on your real estate because now if they get a divorce or credit or action bankruptcy they pass away or they need long-term care you might lose that home. So joint ownership is great for a married couple but I wouldn’t recommend naming anyone else join on your accounts. The second would be beneficiary designations. The third would be through a trust but if an asset doesn’t pass through one of the first three ways then it ends up going into probate and of course, that’s what we want to try to avoid. So joint ownership we don’t want to name our kids joints on our home. So typically what we’re doing is one of two things. We’re either doing relying on beneficiary designations or a trust or both. Typically what we’re doing is something called a ladybird deed named after Lady Bird Johnson and really what this does it says the home is in your name. You can refinance it you can do whatever you want while you’re live and then if you pass away it acts like a beneficiary designation where then goes to the kids. 

So that’s great that’s a great way to avoid probate make sure the home goes where it’s supposed to. Now we also have our asset protection trusts. So if we do want to protect the home or we think we might sell the home and we want it protected then what we would do is we would deed the property directly to the trust. So the trust would be the owner so what’s the best way to handle the home to avoid probate either a ladybird deed which is basically a beneficiary designation for your home kind of a simpler way to do it or we might deed it directly to a trust but what we wouldn’t do is do joint ownership okay. Because then you’re opening yourself up to all the liabilities of the kids. All right that is all of the submitted questions I had ahead of time I had two questions submitted while I was going here and so let me get these answered. And while I’m doing that if you do have questions please put them into the chat or the question and answer section. All right so this next question so brings me to number four can you explain what an IUL savings count is and if it’s good to have an additional to the Roth. Okay, so I have what is IUL. And then next one the person wants to leave real estate to children with a provision that children must sell split what estate planning device is the best. All right let’s answer that one first just because I was talking about real estate. 

So the question is we have this home and we want to leave it to the kids and apparently there’s children. So more than one children so we want this home to go to the kids from the parents upon death but we want to make sure that they have to. So we’re building in some rules they have to sell and split the real estate what estate planning device is best. So anytime you’re building in rules or you’re telling people what you want to happen after you pass away almost always it’s going to be a trust is the answer. You could do a ladybird deed like I just talked about but then it’s going to go out right to the two kids or three kids and they can then do whatever they want. So they might argue about it or they might hold on to it you’re really leaving it up to them versus with the trust what you can do is it’s basically creating your own rule book. So you could appoint like one of the kids as the trustee their job would be to then uh sell it and split it equally amongst the beneficiaries. So yeah if we’re going to build rules around what’s going to happen upon death then we’re typically going to look at a trust.

Now you might be asking about what about a will well like I said over here there’s only four ways assets transfer joint ownership beneficiary designation trust or probate I didn’t mention a will because a will does not avoid probate. All a will does is gives instructions to the probate court on how to administer your estate. So if you’re looking at avoiding probate you don’t want to rely on a will because a will gives instructions to the probate board. So again if we have a piece of real estate and we want to build some rules around what happens upon death then we’re going to look at a trust as the route that we’re going to go. Likewise, I have a lot of clients that right a lot of clients this is me drawing Michigan that’s horrible a lot of classes. So we’re right here I have a lot of clients with that cabin up north right going up north in Michigan. 

It’s something that we think of a lot or property out of state and they want to make sure that this cabin stays in the family-like maybe the kids have a lot of memories and the grandkids have memories and they want to they want it to stay in the family. So again this is where we would look at a trust and maybe even with the second piece of property we would put it inside of an LLC a limited liability company because we can build in some additional protections. Build-in some additional rules. So not only if you’re planning for your primary residence would you want to trust but also if you have that cabin up north or that hunting grounds. A lot of my clients have just yesterday I was sitting with clients they had I think four pieces of property.

They had some hunting ground that has been in the family and we basically put all these properties into the trust because they wanted to protect it from long-term care costs or lawsuits in the future. And then this asset went down to the kids. They wanted to make sure there are some rules around it. So yeah so I’d say nine times out of ten if we’re looking at protecting real estate the answer is going to be at the very least a trust. All right so now getting back to can you explain what an IUL savings account is and it is good to have in addition to the Roth. Yeah, so IULstands for index universe whoops universal [Music] life insurance and for a lot of people. This is a relatively new concept because kind of the old way of thinking about life insurance. Is life insurance you might have heard the phrase buy term investorized. 

So when you’re younger you have a need for life insurance especially if you have young children. So my kids are 10 and 8 god forbid I pass away I want to make sure there’s life insurance to take care of them and get them through college et cetera. Right so there’s a need for life insurance but then as you get older there’s not a need for life insurance but there is the life insurance can be a tool that depending on your strategy can help you achieve the goal. So it’s looking at life insurance not necessarily as insurance but as an asset class and the reason for this is so we’ve heard of things like 401ks right. What is 401k? It’s just referencing the tax code and its reference referencing a section in the tax code. So life insurance also has a section in the tax code so-called 7702. That says the growth if it’s set up correctly the growth on this can be income tax-free. Okay, so you can access the cash value of the life insurance during your lifetime income tax-free. And so now we’re looking at life insurance is another source of tax-free income but then it can also be a legacy.

We can leave more to the next generation and tax-free in a tax-free manner and I think to understand where this may fit in is to look at tax buckets. We need to understand that every asset falls into one of these different tax buckets so we have taxable. So this is where you’re taxed on the games right capital gains. Okay then we have tax-deferred anything you pull out of here is tax to ordinary income tax rates. Your marginal tax rate then we have we’ll call it tax-free. And this is income tax free and then we need to talk about this fourth bucket especially with president Biden and his proposals I call this tax free plus. So this is not only income tax-free but also state tax-free. So taxable accounts are like your checking savings accounts you get 1099s any growth. Here this is your brokerage accounts any growth here you’re taxed on the gains. Okay, this is after-tax money that you invest it grows you have to pay on gains and again this is where with a step up in basis if you have a million dollars sitting in taxable accounts and president Biden gets rid of that step up in basis. Now when the kids sell it they might have a lot of tax that’s due then we have tax-deferred this is like your IRAs 401ks four or three b’s five 457s. 

This is pre-tax dollars this is what we call the always taxed okay whenever you pull this money out it’s always going to be taxed. This is sometimes taxed okay and then we have tax-free. So this is like your Roths your IUL your cash value life insurance 529s have to be used for education health savings accounts. Okay, these are all income tax-free, okay but they’re not estate tax-free. We still have to worry about estate taxes with these and again if estate taxes are going from 11 million to five million dollars exemption to three and a half million dollars then we need to be concerned about estate taxes. So everyone defaults to doing like a Roth conversion right not a Roth contribution but just moving the money from the IRA. Paying attacks and now it’s sitting in the Roth bucket. So that’s kind of simple but really maybe especially if you’re concerned about where estate taxes are going a better option might be to pull money from the IRA have it go to the IUL because the IUL depending on how we set it up. Could also be a state and income tax-free where we could move the iowa with what’s called an islet irrevocable life insurance trust. We can move that islet out of your estate for estate tax purposes. So now you can leave money that’s not only income tax and estate tax-free to the next generation. So that’s where IUL’s from a legacy standpoint makes a lot of sense because it can be income tax-free and estate tax-free versus a Roth. 

It’s just income tax-free if you have five million dollars inside of a Roth and the estate tax exemption is three and a half million then that Roth 1.5 million of that will be taxed at still 40 percent. It’s not income tax it’s a state tax versus if we leave 5 million inside of an IUL to the next generation that’s and it’s inside of an islet that’s income and estate tax-free. So IUL’s can be a good tool with regards to planning for estate taxes and also it can be a good tool for income as well and really the way IUL is structured think of it kind of like a pie and depending on what your goal is the tool can be structured differently. And that’s where again we always start with what is your goal let’s figure out the best strategy and then pick the right tools. So if this is kind of the benefits of an IUL there’s really kind of three main things that we can do one is we can create tax-free income.

Okay I have an IUL that I’m planning on using a portion of that for tax-free income to pay for my kids college in about eight years plus I’m going to keep contributing to it. So that when I do retire which is far far far down the line I can pull the money out of this investment income tax-free. So it gives me another leg of tax-free income in retirement a second piece of this is a death benefit. So right now if I were to pass away there’s a large death benefit that would kick in uh likewise with a lot of my clients we set this up we set it up for a legacy uh like I have clients just looked at running some numbers for a 72-year-old who they’re not going to go through all their money during their life. We’re looking at leaving more money tax free than the next generation. So they’re more interested in the death benefit but also depending on what your goals are that death benefit could also double as a long-term care benefit as well. So for example let’s say your death benefit is 500 000. Well, that could also double as a long-term care benefit as well. So it’s a way to build in some long-term care protections and then we just kind of work with these numbers like maybe you don’t want tax-free income then that would be a larger kind of legacy play where now we’re leaving more to the next generation. So now we’re leaving estate tax-free death benefits to the next generation okay.

So it’s an interesting tool it’s really complicated it takes a long time to set up it’s not for everyone but it is an interesting tool and when we’re looking at what are your options for tax-free income and just everything when you’re talking about risk what you want to do is diversify. So you might have money in a Roth you might have money in an IUL and those are kind of the main tax-free income sources people are utilizing in retirement. Especially if taxes are going up typically with a Roth this will be invested in the market. So you kind of see it grow like that versus IUL it has the power of indexing and it has what we call downside protection. So if the market goes down you stay where you’re at if the market goes up you collect the upside so it kind of grows more like that. So I’m not saying one’s better than the other but again the idea is diversification. So having a little bit in both for example if you have let’s say 50 of your money in a Roth 50 in the IUL and you need this for the retirement income you could look to see what is the market doing if the markets if the market goes up maybe you’re pulling from the Roth right take some of those wins off the table if the market goes down.

Well, we don’t want to be pulling from an account that’s losing money maybe that’s where we create tax-free income from your IUL. Okay, so again it’s just diversification these are just some different tools that you can use. So the question was can you explain what an IUL savings account is and if it is good to have an addition to the Roth yeah it is a tool that probably should be explored depending on what your goals are. So if your goal is tax free income then your main two choices are going to be Roth or cash value life insurance IUL. Sometimes people call this a lerp which is a life insurance retirement plan. We all have all these fancy acronyms it’s just kind of like a marketing term. So IUL index universal life that’s typically the type of life insurance we’re using these days. Lerp is kind of like a marketing term for that same thing. So if your goal is tax-free income then you’re going to look at Roth and maybe IUL. If you’re looking at leaving a legacy especially tax-free and you’re concerned about estate taxes then really if you can life insurance might be the route to go. So or if you’re concerned about long-term care costs then maybe you want to look at it as well. 

So if your goal is any one of those three then maybe explore looking at index universal life and again it’s a little bit of a shift of your thinking because now we’re looking at life insurance not as a need but as an asset class sometimes people have called IULs like rich man’s Roths. So yeah a Roth is kind of more of a basic approach but depending on your situation maybe IUL is something that you want to explore and again something that we can obviously help you with all right does IUL cost more based on age. Yeah, kind of you’re not going to get as much bang for your buck. So with kind of think of it like this and it also depends on what your goals are too. But IUL anything insurance-related typically would have some type of cost okay that’s the cost of insurance. So if we think of this as our cash value that grows tax-free there is a cost associated with this so we have this cost kind of going out of the account and what this cost is is what’s called a mortality expense. So there is a cost to this but what does that mortality expense buy you what it does is buys you that death benefit.

They can also double as a long-term care benefit. So there is a cost and typically that cost might be kind of depending on the policy let’s say maybe one and a half percent, okay but typically what you’re getting in here is a five to eight percent rate of return. So there’s a cost now as you get older um this mortality expense this what happens is this death benefit goes down okay. So if we’re looking at this just for if the goal is tax-free income we’re just using the insurance piece to qualify for section 7702. Like we’re not concerned about the death benefit per se. Okay, I have a lot of clients that set this up because they’re they don’t need the death benefit they don’t want the death benefit they just want something that’s going to grow in a tax-free environment. That’s going to be indexed versus in the market and so they’re hedging their bets they’re creating diversification. So they don’t really care that their death benefit is less than maybe someone who’s 10 years younger they’re really just entirely focused on I want this tax-free growth. So I can pull the money out for my needs. Okay, so the goal is to actually like deplete this to the point that there’s almost no death benefit left maybe but on the flip side if our goal is leaving a legacy then yeah age and health are going to be a bigger issue right. So I if I were to take let’s say 500 000 um and for a 70-year old that 500 000 would be a death benefit. So if and I’m just making up numbers right now. 

So let’s say we put in a premium of 500 000 at age 70 that death benefit by might be one million dollars. Okay now if we’re to do this for a 75-year-old with that same 500 000 then that death benefit at 75 might be and again I’m just making up numbers 750 000. So it’s not the cost go up it’s just that the death benefit or long-term care benefit would drop the older you are or if you’re in poor health but typically there’s kind of two eight two people that are typically looking at these people during accumulation. So this is kind of people while you’re working so this would say 30 to 60 65 lets’s say. So I fall in this accumulation phase and what I’m doing is putting money into this annually okay so each year. I put in x amount of dollars to my policy, okay the other would be people who are more in what I call preservation slash distribution. So this is when you’re retired. You’ve accumulated a lot of wealth but if you’re like a lot of the people that we see a lot of your wealth is in this tax-deferred account in like pre-tax IRAs. 

So now you need to move it over to tax-free and so uh preservation distribution typically what we’re doing is big lump sums like big amounts maybe over five years. Okay, so they have a client we’re looking at putting about 1.5 million moving that over to the tax-free bucket and we’re going to do it over a period of say five years. Okay, so that was my deep dive into IUL. Any last questions. We have a comment coming in thanks Chris my pleasure any other questions thank you you are very welcome as well all right. Okay so with that I want to thank everyone make it a great week. Cross your fingers this Saturday for me it’s our last soccer game if we end on a win but it’s been a pleasure doing these wisdom webinars with you and I look forward to next week as well take care make it a great week bye-bye, go Maddie someone says thank you. 

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