Let me clarify at the outset that I don’t sell life insurance. However, The Blum Firm is a big fan of life insurance as a solution to many estate planning challenges. In my speech this month to the Dallas Estate Planning Council, I described seven situations where life insurance came to the rescue (click on this link for my presentation on “Life Insurance Planning Opportunities”).
I started my speech by mentioning that I’m about to attend the 45th reunion of UT Law School’s class of 1978. I reflected on the estate planning world of 1978 compared to estate planning in 2023. If an estate planner from 1978 came back to hear my speech, he would hear a whole new vocabulary and wonder, “What is this foreign language Marvin’s using?” SLATs, Blended Families, Loan-Regime Split Dollar, Mixing Bowl Partnerships, PPLI, Life Settlements, FAST Trusts—none of those were part of estate planning parlance when I started my law practice 45 years ago. Their heads would be spinning.
In this new world of estate planning, planners think “outside the box” to derive creative solutions to address our clients’ needs. Many of those solutions involve life insurance. Here’s an overview of the topics I covered:
- Each spouse’s SLAT (Spousal Lifetime Access Trust) may buy life insurance on the other spouse to replace assets in the deceased spouse’s SLAT that will benefit the children at the first death.
- If you love your grandchildren equally, consider a life insurance policy that passes equally to your grandkids, per capita rather than per stirpes.
- For today’s “Blended Family,” I identified five situations where life insurance can help preserve family harmony.
- Loan-regime split dollar life insurance can help you “have your cake and eat it too,” removing assets from the estate but preserving a stepped-up basis at death.
- Using a “Mixing Bowl Partnership” can enable you to shift basis from one asset to another, allowing you use an appreciated asset to buy PPLI (Private Placement Life Insurance) without incurring tax on the gain.
- Before cancelling a policy, consider selling it in a Life Settlement, often for far more than the policy’s cash value.
- Create a FAST (Family Advancement Sustainability Trust) funded with life insurance to pay for family retreats, family travel, maintenance of legacy real estate assets, and overall family enrichment after G-1 is gone.
I closed by urging estate planners to address these topics with our clients. Not only will it help our clients and their families achieve their goals, it will also help show our clients that we truly care about them. I concluded by quoting Teddy Roosevelt: “People don’t care how much you know, until they know how much you care.”
Marvin E. Blum
Marvin Blum was honored to speak about “Life Insurance Planning Opportunities” to the Dallas Estate Planning Council on March 2, 2023.