Check a few things, even if it’s the “perfect” plan


dear michael: We have implemented our farm succession plan. Our son is a farmer and we have set aside some money for our off-farm children to make up for what he gets. We also have long term care insurance, so no one should have to pay for it. We are approaching our 50s and believe we have done a great job with our transition plans. Will there be something in the next tax bill that will upset the basket of apples? – Generous basket of apples

Dear Bountiful: Looks like you’ve organized things really well. If I had to give you a check-up, it might go that way.

Are your other children’s funds protected in any way against inheritance, income or probate fees? Did you know that most heirs experience a 25-35% reduction in their inheritance? Mainly due to poorly held assets, a rapid decline in the stock market or a higher cost of long-term care than you expected?

All your life you have been building and building and building. When you hit around 60, it’s time to a) enjoy the fruits of your labor and b) protect, protect, protect.

If you do it right, you should have enough money to live your life the way you want to, even if that means sitting on a tractor during the planting and harvest seasons. Or you might have other plans. A client of mine bought a ’56 Chevy Bel-Air 2-Door – beautiful! An asset that will be fun during your lifetime and which will be more valuable when you die.


A retiring couple should look at all the income and assets they will have and compare them to their living expenses. If you earn enough money to keep saving and / or think your savings will never need to be touched for retirement, take some of that money and put it where it can never be. affected by income taxes, inheritance taxes, long-term care costs, etc.

It would be like using some sort of irrevocable trust to set aside “extra” dollars. You can take advantage of those extra dollars by investing in life insurance. Now that these policies will see an average growth of 5-6%, they are certainly not the same old life insurance policies your parents knew. IRS has enabled larger contributions to life insurance policies in recent times, again making it a solid investment. If you live long enough, your children can receive tax-free income. If you don’t, they will receive tax-free death benefits.

Second, everyone comes to me and says “Oh, I have long-term care insurance! But just having a policy is not the total answer. The question should be: “Do you have $ 400– at $ 500,000 in your policy for each of you for long-term care costs? “

The number is just around $ 440,000 for the average costs of long-term lifelong care. If you are not insured for this amount, then you are underinsured. It would be like wearing $ 100,000 insurance on a $ 250,000 to stay!

The other thing you will notice is that your home insurance, farm insurance, and health insurance all have built-in safety factors for inflation. Did you know that the average home inflation factor is around 2%, but long-term care costs have increased on average 7-9% per year? The cost of your home insurance goes up – and it needs it to rebuild your home in the event of a disaster.

However, most long term care insurances have either an inflation or an inflation rider of three percent. Usually people have $ 200 or less per day for long term care coverage and that’s about 50% of what it should be. Where will the additional cost of care come from?

You’re only in your 50s, and studies show average lifetime long-term care costs in 30 years are going to approach $ 800,000. It sounds like a lot, but I remember a lot of people had a $ 100 per day and now, that won’t even cover the cheapest long term care or assisted living facilities.

You may have your “basket of apples” jam-packed, and you may think you went out of your way to grow them – and you did. But now it’s time to worry about what apples you have on hand and how you are going to protect them. A little less focus on growth and a lot more focus on protection and you will reach your 80s carefree.

Consult a qualified real estate planner if you want a quick review, even if you think you have the “perfect” plan.


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