The Shape of Tax to Come

A Tax & Estate Planning blog for 21st-century Texans

KISS High-end Life Insurance?

The Wall Street Journal is reporting that Gene Simmons has finally gotten into the insurance business. Gene Simmons, as you may know, is the lead singer of the rock group KISS. He has been exploring new and exciting ways to slap the KISS logo on any and all products for the last three decades. At this point, his marketing and merchandising efforts have long since jumped the shark. I could come up with something witty, but that would just be a waste of time. Honestly, I’m curious why it took him so long to finally get involved in this market.

Mr. Simmons’s new group, Cool Springs Life Equity Strategy, was launched last month to tap into a lucrative demographic: entertainers, sports stars and other people with a net worth of $20 million or more who need a life-insurance policy of $10 million or greater. The firm’s founders, who include David R. Carpenter, formerly of insurance powerhouse Transamerica, believe there is big opportunity to sell jumbo insurance policies to rich people.

Yes, undoubtedly there is.

“I’ve been in the business my whole career, and life-insurance executives do not have audiences,” adds Mr. Carpenter, the Transamerica veteran. “Gene has audiences. Gene has the reputation [as] a genius merchandiser and marketer. He has great ways of conceptualizing products.”

So, slapping “KISS” on anything nearby, regardless of quality, equates with genius merchandiser? While the KISS army might be dumb enough to buy any stupid thing you sell, people in the market for this amount of insurance are probably not going to be fooled by the whizz-bang feature of having Gene Simmons on the label. Failing that, their lawyers should stop them from succumbing to Gene’s hypnotic advertising powers.

But Gene would never lead you astray, would he?

Some advisers and estate-planning attorneys (Including this one-ed.) aren’t enthusiastic about the notion of borrowing money to pay insurance premiums under any circumstances. They say borrowing costs can run higher than the buyer expects, or the arrangements can run into other problems, such as a bank tightening its collateral requirements. One of the biggest concerns is that borrowing programs presume that savings within the policy will earn more than the interest on the loan—but if interest rates spike sharply, the borrowing costs could jump ahead of interest earnings.

Thankfully, the Journal was good enough to find a lawyer to talk about this so I don’t have to.

“Tell me when Alice Cooper comes out with one”

Um, yeah. What he said.

He should be wearing makeup

April 12, 2010 Posted by | Uncategorized | , , | Leave a comment

Drop in Estate Planning Indicates Wrong Planning Focus

In a startling display of lack of foresight on the part of the American public, a recent survey from shows that only 51% of the public has estate planning documents. Part of the reason cited for the drop is that the economic downturn has made planning more difficult. While the economic downturn is a reason, this is not a satisfactory one.

True, not knowing what the value of your assets will be over the course of the coming years will make planning more difficult. However, financial management of assets such as this is not the only reason to plan your estate. In many cases, the financial aspects of the estate plan are not the primary reason for planning. Taking care of your loved ones and ensuring that you don’t leave a legacy of conflict will be much more important than any pecuniary amount left behind.

By taking the time to carefully plan out your estate, you will have a plan in place when something happens to you. Many of the choices made will not be impacted by the financial markets. If you are incapacitated, there is no direct answer to the question “who is in charge here?” By taking the time to determine who your guardians are, you can save your family the time and expense, both monetary and emotional, of arguing over control of you. Having the living will or advance directive in place will ease tensions regarding medical treatment. And both you and your family will be able to rest easy knowing that the decisions made were made in line with your wishes.

And what estate plan would be complete without providing for the care and upbringing of your children? Knowing the persons to whom you want to entrust the care of your children in the case of your death is possibly one of the most important decisions that parents can make in planning for their estate. It is certainly the decision that takes up most parents’ time. Would you rather your family spend time in court arguing over custody of the children? Is no plan really the best plan?

The bottom line is that planning your estate has more to do with items that are unrelated to the state of the markets. It is far better to have a plan that takes care of the things that truly matter, you and your family, than the items that are affected by market shifts.

Decline in Estate Planning

Read the full article here.

March 2, 2010 Posted by | Uncategorized | , , | Leave a comment


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