Wealth is a mindset that combines the material and spiritual — rooted in knowledge, wisdom and trust
by John Tetzloff
Advanced Case Specialist
“A long time ago in a galaxy far, far away…” or “Once upon a time” are some common openings to the stories that entertain or thrill us.
Unlike those fictions and fairy tales, I would like to tell a TRUE story that is quite common among those we assist with their estate planning. Although this story has somewhat of a sad ending, it reflects the courage and persistence needed to make sure things are in order when life takes a turn.
The story starts with a workshop. Bob and Sandy (names changed for privacy) ages 73 and 70, attended a Catholic United Estate Planning workshop at their local church. There they learned that their current plan was woefully outdated and asked to have their local Sales Rep review their current plan and provide some guidance to update. After gathering information from Bob and Sandy, the Sales Rep, let’s call him Peter, discussed their information (with their permission of course) with the resident estate planner at Catholic United. Their estate was made up of IRAs, retirement plans, a home, some small life insurance policies, checking and savings accounts at the local bank, and various investments totaling approximately $800,000. Bob and Sandy wanted to make sure assets were protected for each other and their heirs as well as make the process easy and painless for their kids once they passed away.
Bob and Sandy, along with Peter’s help and guidance, completed the following:
— Met with a local estate planning attorney, their oldest son, and Peter to update their plan using a will and trust to maintain assets while living and provide a smooth transition of assets to their heirs upon death and/or disability.
— Started a life insurance policy with an Accelerated Death Benefit to provide protected assets for each other and their heirs as well as provide an option to use for nursing home care, if needed. They funded this using money from their IRAs to turn taxable assets into tax advantaged assets for their kids.
— Consolidated their multiple IRA’s into one to provide ease of distribution, less paperwork, and a guaranteed return using a Catholic United Financial IRA annuity.
— Took advantage of the Qualified Charitable Distribution to provide charitable gifts both now and in the future by making direct gifts to their local church and the Catholic United Financial Foundation for their legacy gifts. Remember, if done properly, there is no tax due.
As with all stories, there is an end. Unfortunately, this one ended on a sad note. Bob was diagnosed with Alzheimer’s and is currently residing in a nursing home. But because of their planning, assets are protected and the nursing care is being paid. Sandy recently passed away from a heart attack. Again, due to their planning and the life insurance, her heirs now have tax-free assets. These they can use to pay any last expenses, replace assets lost to nursing home care, cover taxes and support their grandchildren.
The estate planning process doesn’t have to be a daunting task. By working with your local Sales Rep and a local legal professional you can move through this process with ease and confidence knowing that your legacy will continue to your heirs in the best possible, way and your story will end happily ever after.
May God bless you and your families.
Catholic United Financial and John Tetzloff are not permitted to give tax or legal advice. The information given is based on our understanding and interpretation of laws and regulations currently in effect. You may wish to consult your personal tax or legal advisor with questions about your specific situation.