Getting It Right the First Time - Ultimate Estate Planner

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Getting It Right the First Time By Jason Oshins, MBA This article tells the unlikely account of a second chance and presents a framework for making sure protection is airtight. 5, 4, 3, 2, 1. The whistle blows. At the count of “two”, my 9-year old son, Spence, kicks the soccer ball, and just as the whistle is blown, he’s on the ground writhing in pain. I sprint onto the field to comfort him. He says he can’t feel his wrist and can’t move his hand. Rewind to exactly one week before. I’ve been on the phone with his healthcare provider for over an hour attempting to rectify a processing error on their side. Apparently, due to this processing error, autopay wasn’t set up properly. Hence, through no fault of my own, my son had been without medical insurance. Thankfully, the error was caught just in time. As I take my son to get medical attention at the soccer tournament, I can’t help but reflect on the role of protection in our lives. More importantly, I can’t help but fixate on the importance of getting it right. Very rarely – in fact, almost never – do we have an opportunity to go back to fix it. This is Spence’s wrist, but it could have been so much more.

airtight. Then, we can address the growth element. It’s incumbent upon us to make sure our clients understand the critical nature of this.

My mind starts playing the association game. What if it were my health and not my son’s that was compromised? What if I had gotten into an accident? What if I had died? Would my family be alright? What if I didn’t die but was too sick or injured to work? What if I had experienced debilitating anxiety or depression? If I were unable to generate income, what would become of my family? Of me? And on and on and on.

Let’s discuss what is meant by protection. We’ll begin at the concept level, and then we’ll drill down into specifics. Conceptually, it entails identifying and addressing threats that can otherwise derail clients from having the future they envision. While this article doesn’t provide a comprehensive list of threats (far from it), it identifies those with the greatest immediacy and provides a framework for addressing them. It introduces the category, a relevant statistic, and a few salient questions to stimulate discussion.

Clients come to financial advisors to help them protect and grow their wealth – in that order: First protect. Then grow. The number one priority is to make protection

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When we think of health, we think of physical, psychological,

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emotional, and financial health. While this article is focused on the financial element, we’d be remiss not to acknowledge the impact that financial health has on the others health areas. According to research conducted by MIT Sloan School of Management Professor Robert C. Merton[1], people are happier when they know they have uninterrupted income. So, given this relationship between cash flow and happiness, we’re going to assess all threats in terms of how they impact cash flow[2].

3. Estate Planning[6]:  Fact: Only 44% of American adults have a will or other estate plan documents in place.[7]  Questions: N Have you executed basic estate planning documents, including a will/trust, health care proxy, and power of attorney? N Have you planned for the care of your loved ones in the event of your death? N Are your assets protected in the event of lawsuit, divorce, or wealth transfer?

As such, wouldn’t it make sense to begin at the source by protecting our ability to generate income in the event of sickness- or injury-related disability? Concurrently, what about those who are dependent upon us? Wouldn’t it make sense to ensure they’re addressed in the event of death? And lastly, shouldn’t we address ways to protect the family or estate in the event of lawsuit or accident?

4. Excess Liability (Umbrella) Insurance[8]:  Fact: Each million dollars of coverage costs about the same as the cost of one latte per week.  Questions: N Could an accident result in a lawsuit that could jeopardize your wealth? N Do you have personal liability insurance beyond your auto and homeowners insurance policies? N How would you fund a legal defense in the event of a lawsuit resulting from a claim?

To follow are four areas to explore, a relevant statistic to contextualize each, and a few basic questions to stimulate discussion: 1. Disability Insurance:  Fact: Just over 1 in 4 of today's 20 year-olds will become disabled before they retire, yet 69% of workers in the private sector have no private long-term disability insurance.[3]  Questions: N If you become sick or injured and are unable to generate income, how will that impact you and your family? N Do you have Disability Insurance through work, and, if so, how much income does it replace? N What are the terms – how much benefit is provided, is it subject to income tax[4], how long does it pay, does it provide partial benefit, does it pay for “own” occupation or just “any” occupation, does it include cost of living adjustment?

We were fortunate – it only was a broken arm after all. Healthcare, following an I-can’t-believe-it’s-that-high deductible, covered Spence’s needs. In a few weeks, he will have his cast removed, and following that, he should be back to business. But, what if it didn’t work out this way? What if it weren’t Spence, and what if it wasn’t simply a broken arm? What if it were me? What if a sickness or injury prevented me from working for several years – or forever? What if something happened to me, and I passed away? What if I had a horrible medical diagnosis? What if I got into a car accident and got sued? What if… fill in the blank! Here’s the point. Rarely do we have a second chance to get the protection piece correct. I highly recommend that each advisor reach out to clients in order to do a protection assessment. Then, we can turn our attention to wealth building.

2. Life Insurance:  Fact: 30% of people believe they need more life insurance and 43% say they would feel a financial impact within 6 months if the primary wage-earner died.[5]  Questions: N If/when you die, what will be the financial impact on your family? N How much life insurance do you own, how did you select this amount, and what are the implications of owning this amount? N What life changes have occurred since you selected this amount?


RESOURCES [1] “The Crisis in Retirement Planning”. Prof. Merton elaborates on the differences between emphasis on assets and emphasis on cash flow. [2] This article uses the terms income and cash flow synonymously. [3] U.S. Social Security Administration, Fact Sheet February 7, 2013, cited on http://www.disabilitycanhappen.org/ chances_disability/disability_stats.asp.

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[4] Most group disability policies provide a benefit which is then subject to income tax. [5] 2015 Insurance Barometer Study, Life Insurance and Market Research Association (LIMRA). [6] Given the article’s focus on immediate needs, estate planning here addresses basic needs, as opposed to advanced planning objectives. [7] 2011 EZLaw™ Wills & Estate Planning survey, cited on LexisNexus.com. [8] In order to quality for umbrella insurance, insurance carriers require increased limits. As such, this focuses on the umbrella component, recognizing the important – and likely requirement – of having strong auto and homeowners insurances.

ABOUT THE AUTHOR: Jason Oshins is a Financial Advisor with Wealth Strategies Group. He works closely with clients throughout the country to increase wealth during lifetime, improve income during retirement, and provide a greater legacy upon passing, while also protecting their estate from taxes, inflation, and market volatility. He specializes in the areas of estate planning, investments, retirement planning, insurance planning and design, disability protection, long-term care, wealth transfer, and business planning. Jason obtained his MBA from the University of Michigan in Ann Arbor. He can be reached at (702) 735-4355 x218 or at [email protected].

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This material contains the current opinions of the author but not necessarily those of Guardian or its subsidiaries and such opinions are subject to change without notice. Guardian, its subsidiaries, agents, and employees do not provide tax, legal, or accounting advice. Consult your tax, legal, or accounting professional regarding your individual situation. Registered Representative and Financial Advisor of Park Avenue Securities LLC (PAS), 6455 S. Yosemite Street, Suite 300, Greenwood Village, CO 80111, 303-770-9020. Securities products and advisory services offered through PAS, member FINRA, SIPC. Financial Representative, The Guardian Life Insurance Company of America (Guardian), New York, NY. PAS is an indirect, wholly owned subsidiary of Guardian. Wealth Strategies Group is not an affiliate or subsidiary of PAS or Guardian. All investments contain risk and may lose value. Equities may decline in value due to both real and perceived general market, economic, and industry conditions. Investing in foreign securities may involve heightened risk due to currency fluctuations and economic and political risks. Past performance is not a guarantee of future results. Diversification does not guarantee profit or protect against loss. References to specific asset classes are for illustrative purposes only and do not constitute a solicitation, offer or recommendation to purchase or sell a security. 2016-22865 Exp. 5/18

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