Fall 1999 Issue No. 2
Random Thoughts:
Hello to all my family of clients and friends. In this, my personal column I endeavor to brainstorm with random helpful thoughts on various topics. The topic of today is asset protection, apropos in the wake of Y2K and the new Millennium.
Y2K is it real?
We know it is mechanical so there is a possibility that it is real based on that fact alone. Be able to rely on yourself, that's your ultimate security. You should attempt to maintain control over your assets whatever level they may be. That's not to say however that you should not have reliance on mechanical systems but take precautions. I do not intend in this article to pretend to know how a computer works but I know that there could be extensive down time and you really can not anticipate it and you don't want to have it occur at an inopportune time, which is why I have attempted to have this news letter circulated within my client network before the millenium, the purpose being only to put the thought in your mind of evaluating your own situation and making certain that you can maintain some type of control if Y2K does visit us. Did you try to make a phone call or get cash from the ATM during Hurricane Floyd. Y2K could be similar. There are several general precautions that could be taken at no major expense and they deal with record keeping and retrieval, and cash reserves. First, you should know where your assets are and be able to evidence where they were before the Y2K visit. Second, you should have some cash reserve on hand rather than isolated in a vulnerable bank account. We are not talking here cash invested, but rather the funds which are usually written by check or withdrawn by our friend MAC, sufficient enough for a reasonable amount of time, probably as little as a week or two, to possibly a month; just enough to evaluate if there is a problem and be able to sustain while the slow working government makes its repair. We must also protect those assets, regardless of where they are recorded, and allow them to grow comfortably. A term of the day in such context is life insurance trust. Such is probably a term not familiar to most and my outlook on the term is probably a bit broader then the legal community recognizes. We talk about the use of life insurance in estate planning but same also affords various advantages during life. I am a fan of life insurance as an estate planning tool because there are also benefits to such assets which can be utilized in life, the most recognizable being the borrowing power on the proper policy at less than market rates. Life Insurance can also be used as part of an investment strategy although the life insurance companies do not wish for us to concentrate on that aspect of the policy. Most important, however I think Life Insurance gives you comfort in knowing that there will be continuing security for your family at a certain level that is probably as close to a guarantee as you are going to get as long as you choose the proper insurance company. I personally have a diversified portfolio of whole life and term insurance with Prudential Insurance and Northwest Mutual. I like Prudential because of their financial size. I like Northwest Mutual because of their conservative nature and quality involved in their administration. I also have two very knowledgeable insurance agents, who are accessible as well as knowledgeable, Jim Flynn from Prudential and Lon Moss from Northwest Mutual. With the right structure you can have a sizable investment growth fund, when compared to your investment over the life of the policy, for distribution as you direct to your family after your death. I myself have sufficient insurance that I feel comfortable that my children will not be pressured to work in an environment where they may not feel comfortable and that they will beproperly educated. I also have the distribution of proceeds from my insurance handled through a trusted family member to oversee the administration of the funds until the children are mature enough to handle it on their own. Once in place , how do we make certain life insurance proceeds pass to the beneficiaries and are not cut off at the pass by the IRS?
Decision Time:
RISK ASSESSMENT
Website Status:
We will be updating and upgrading our website to bring us of age on the internet hopefully to be up and running 1st quarter of the millennium and Y2K compliant at which time our web address will also likely change to make it more user friendly.
Recognition: My wife for her editorial ideas
John Becz for his contribution to our office surroundings
My staff's support
Our friends at Synergy Brands and Gregory Medical for client support.
My friend Miro- advanced congratulations on the new baby.
We Are! Thank you Joe for another very good year.
Sincerely,
Randall J. Perry, Esq.
** The views and ideas suggested in this newsletter are not to be misconstrued as legal advice. Insurance trusts and other estate and retirement ideas expressed herein are an integral part of financial planning: consultation with a professional consultant is recommended.