Rachael Ray Talks About Estate Planning
I don’t enjoy Rachael Ray’s talk show as much as I like to watch her do-bop around the kitchen (and I bet you do too!), but I came across an interesting little segment on a website of a couple of lawyers (married) selling a book they wrote called “Trial and Heirs: Famous Fortune Fights.” The segment starts off discussing nothing new about Michael Jackson and Anna Nicole Smith’s estate wrangling, but the guest authors relate those estate battles to practical reasons why people need to get their estate planning done. Surprisingly good advice in a very short amount of time. It’s a good video clip to have your clients watch, because a) they get to see Rachael Ray; b) they get to hear celebrity gossip; and c) they actually hear some pretty convincing reasons for getting their affairs in order, which would obviously include estate planning and insurance. So check out the video, and forward your clients to Trial and Heirs so they too can hear more advice about why they need to take action and soon as possible.
New York Life Settlement and STOLI Legislation
It appears New York will actually pass and enact laws during the next legislative session to regulate the life settlement industry and put an end to premium financing arrangements in New York. Senate Bill Number S66009, available here, “would provide a new comprehensive statutory framework to regulate the life settlement business, including enhanced consumer protections.” This last part refers to ending Stranger Owned Life Insurance Contracts (STOLI) arrangements business in New York.
Among other things, life settlement brokers would now need to be licensed and supervised by the Superintendent of Insurance, and meet continuing education standards. Disclosure rules are put into effect, and the ‘unfair competition’ rules which apply to insurance sales in New York are extended to the life settlement business.
Like most “consumer protection” legislation, it’s unclear whether several of the exemptions and exceptions in the proposed legislation where inserted after lobbying by the life settlement industry, and therefore whether the Life Insurance Settlement Association (LISA) and/or those advocating the benefits of STOLI were actually able to save the majority of their business model. I hope so. For what it’s worth, the rise of life settlements and premium financing has benefited consumers, not harmed them. The insurers are the ones who have been screaming like mad (more or less) to have life settlements and premium financing regulated and banned. It’s not all together clear how mom and pop consumers were being harmed in any of these transactions. For 100+ years, for example, the insurance company issuing the policy was the only company with whom the contract owner could surrender their policy and obtain hard cash. The life settlement industry provided an alternative, and policy owners suddenly were being paid significantly more for their contracts than the cash surrender value offered by the original insurer. In fact, many insurance companies have setup their own life settlement subsidiaries to get in on the action themselves.
In addition, the insurers were the ones who developed and put premium financing into general use in the 1970′s as a way to sell more life insurance. For thirty-plus years premium financing was a perfectly legitimate and astute way to use and pay for life insurance in the business context. Unfortunately, like Doctor Frankenstein’s monster, it got out of control and the actuaries did not plan for their invention to become a financial derivative commodity. So the insurance industry has been putting on the full court press for the past five years to stamp out STOLI in the states, and for the most part the most egregious abuses are being controlled by the insurers themselves through internal policies and procedures. Many insurers as well continue to play both sides of the hand though: lobbying against STOLI in the state capitals, while simultaneously issuing the big premium contracts which they know full well (and often market themselves) are intended to be packaged and resold.
And on and on it goes.
Estate Planning Organizer
An excellent way for your clients to save money (perhaps a lot of money) on their estate planning engagement is to have much of the preliminary work done ahead of time. In other words, much of the cost of having an estate plan prepared is caused by the time and effort it takes for the attorney to educate the client about the options available, gather and sort the various documents which are needed to develop the plan, and then discuss your clients’ goals and objectives. As you well know, I run my estate planning practice by sending clients to financial planners who can spend time with the client at a lower cost than I can. The client and financial advisor then can come back to me with a fully developed fact finder and asset allocation questionnaire; a description of the clients’ family situation, and a description of their estate planning goals and objectives. In the alternative, and this is something which you can do as well, I recommend that my clients purchase and complete the Estate Planning Organizer system. This system is a series of educational and practical tools which allow your clients to learn for themselves what “estate planning” really means, and helps them organize their important documents and think about what they want to achieve with their estate plan. This system can save thousands of dollars in legal fees, depending, of course, on how complex a client’s estate planning needs are. Otherwise, a client may have to spend hours in my office while I explain what estate planning is all about, and go item by item through their documents. While I would rather refer my clients back to you for face-to-face work, this is an option which I have now added to my practice. I am an ‘affiliate reseller’ of this program, which means that I earn money when your clients purchase the program. The cost of the program is less than one hour of my $310.00 per hour rate!! This program will save your clients thousands of dollars, and it will save you time and aggravation too, if you are not charging to prepare a financial plan. Have the clients do it themselves, and then you do the financial analysis. It’s a triple win situation.
