I have only had my insurance license for one week and I have a friend who is getting married in late November and is doing on prenup however he also has over $100K in a money market that he wants to move over to some kind of insurance product that he can own so that when he is married, this is considered his going into the marriage. I do not work for an agency, I have a full time outside sales job and I am just doing insurance for extra cash. I am thinking about doing a SPWL or an annuity for him but I dont know if I want to consider a long term annuity. Any suggestions?
Thanks,
Larry
I have only had my insurance license for one week and I have a friend who is getting married in late November and is doing on prenup however he also has over $100K in a money market that he wants to move over to some kind of insurance product that he can own so that when he is married, this is considered his going into the marriage. I do not work for an agency, I have a full time outside sales job and I am just doing insurance for extra cash. I am thinking about doing a SPWL or an annuity for him but I dont know if I want to consider a long term annuity. Any suggestions?
Thanks,
Larry
This is not a case you want to handle on your own. Do you have a mentor that can give you guidance? Do you have an attorney that has confirmed this is a prudent strategy? Is your E&O paid up? If the answer to any of these questions is 'no', you need to stop giving advice until all three answers are 'yes'.
This might sound a little callous, but here's my suggestion: Have him talk to someone in the investment portfolio market so that he is properly represented. I understand he is your friend, and as his friend you should have his best representation interest at heart. You have admitted that this is not your forte, and I would suggest you find someone who would consider this their forte.
However, to answer your question I would advise creating an ILIT and having the ILIT take out a Term policy convertible to UL or a long term UL policy with guarantees. He can also take out an index UL with that kind of money. I don't advise going the SPWL method, I find it's too expensive! You're better off doing a GUL on Guideline premiums than doing a SPWL.
A long term annunity is also an option. Just look into the situation and see what is best for the client.
Put it into American General's Horizon MYG annuity. It pays a first year bonus and the fixed interest is better than a money market. The best part is your commission will be 7.5%.
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A Conservative Government is an organized hypocrisy.
This is not a case you want to handle on your own. Do you have a mentor that can give you guidance? Do you have an attorney that has confirmed this is a prudent strategy? Is your E&O paid up? If the answer to any of these questions is 'no', you need to stop giving advice until all three answers are 'yes'.
The answer is yes to all three however the person whom I am seeking advice from is in his 70s and I dont think he is physically able to help like I know he wants to. Our good friend is his attorney and he agreed that he should invest in an insurance product.
Then do a Guideline Guarantee UL in ILIT format so no one can get to it from his estate (mainly the wife). Make the beneficiaries his children (if he has any) and no one can get to the funds.
This might sound a little callous, but here's my suggestion: Have him talk to someone in the investment portfolio market so that he is properly represented. I understand he is your friend, and as his friend you should have his best representation interest at heart. You have admitted that this is not your forte, and I would suggest you find someone who would consider this their forte.
However, to answer your question I would advise creating an ILIT and having the ILIT take out a Term policy convertible to UL or a long term UL policy with guarantees. He can also take out an index UL with that kind of money. I don't advise going the SPWL method, I find it's too expensive! You're better off doing a GUL on Guideline premiums than doing a SPWL.
A long term annunity is also an option. Just look into the situation and see what is best for the client.
Thanks so much, great advice. He has two other accounts for his investments and of course his investment banker wants him to put the money market money into the market but he is NOT looking after his well being just his. If he would not take such a hit on his stock and mutal fund accounts he would convert that as well to an insurance product. If anyone lives near the south GA area, I would be open to working with them on a good solution.
Thanks so much, great advice. He has two other accounts for his investments and of course his investment banker wants him to put the money market money into the market but he is NOT looking after his well being just his. If he would not take such a hit on his stock and mutal fund accounts he would convert that as well to an insurance product. If anyone lives near the south GA area, I would be open to working with them on a good solution.
Money Market is a bad idea for this scenario - based on the information I have at hand. He's better off with an insurance product than a MM account.
I'm not in GA, but I have a few agents that might be able to help. If you want a referral, I can send your contact info to an associate. Either way, I suggest you have an estate attorney review his situation before he says "I do."
My recommendation is still a low cost Guarantee UL in ILIT format and make his children/grandchildren the beneficiaries. That way, even if she manages to take him for everything he has, his children are still protected.
Is he trying to put in $100k to keep the cash value and grow it, or putting in the $100k to buy the biggest life insurance policy he can to pay out to the beneficiaries, who I assume the wife will not be included in if going this route?
Is he trying to put in $100k to keep the cash value and grow it, or putting in the $100k to buy the biggest life insurance policy he can to pay out to the beneficiaries, who I assume the wife will not be included in if going this route?
Ideally, he would like to have access to the money if in time, there was a crisis and he needed to get the money. My thoughts on a SPWL is that he can borrow the money, with interest of course while still making money. He is only getting 2% in his money market and so if I can protect him and also earn him money, I have accomplished my task. This is a friend and so making big commission is NOT my objective. As I said, I have a full time sales job and the commission I earn goes to my children and their future needs.
Larry
Now I'm no expert in this area. far from it really but if your friend has a prenup, why exactly would the $100K that he has in MM not be considered his? if all he is trying to do is to make sure that the $100K stays his even with a divorce can't a CPA or attorney perform an investment "inventory" before the marriage? This may not be enough legally I am assuming.
Your friend has to decide what is most improtant to him. He currently has it in MM so sounds like he wants to have access to the cash. An annuity could turn out to be expensive with fees. If he is looking to maximize the death benefit to children/grandchildren its a different situation. I think you need to have an in-depth conversation with your friend about what he wants to accomplish other than shielding it from his future wife. The solution should be more obvious after that.
Now I'm no expert in this area. far from it really but if your friend has a prenup, why exactly would the $100K that he has in MM not be considered his? if all he is trying to do is to make sure that the $100K stays his even with a divorce can't a CPA or attorney perform an investment "inventory" before the marriage? This may not be enough legally I am assuming.
Your friend has to decide what is most improtant to him. He currently has it in MM so sounds like he wants to have access to the cash. An annuity could turn out to be expensive with fees. If he is looking to maximize the death benefit to children/grandchildren its a different situation. I think you need to have an in-depth conversation with your friend about what he wants to accomplish other than shielding it from his future wife. The solution should be more obvious after that.
His father own a CPA agency in my city and suggested an irrevocable trust however that screws him in the event he ever needs the money. They can not get too involved because his money is an inheritance by the grandfather and he is living in a huge house with 350 acres that all of them own. He has no children, the wife to be is from Russia, just got here 3 weeks ago. I agree on the annuity, I think it is not a good idea. He and his future wife plan on having children but he still has to have a reversal on a vesectomy. It is really a strange situation, none like I have seen before.
The mentor is 70 years old, he is 38. Not sure where you got the 70 years old from.
Oh, my mistake. I got confused - that happens when I forget to take my meds.
If he's 38, then I suggest going with an index UL. Either way, I suggest you discuss it with an estate attorney. I can refer you to one that I use regularly - he is in California.
Hmm, there really isn't enough information here for anyone to make any recommendations.
You need to talk about his day to day budget, other savings, risk tolerance, what happens if he gets laid off, any other near term cash requirements, etc.
Don't present the solution before you know what the problem is. You may know a lot more than what is presented here, but it is important to know a lot more.
For instance, if he doesn't have 3-6 months of living expenses in the bank, that has to be a priority. If his job is at risk, I would like to see that be a bit longer.
If he has debt he is paying off at 25% interest and barely making ends meet, that might be a priority.
Sometimes pointing out some obvious 'must-do' type things is better than getting the commission check. It might not benefit you right away, but in the long run, it is the right thing to do.
On the other hand, if this is truly extra money, then find out what his goals are and help him achieve them.
Hmm, there really isn't enough information here for anyone to make any recommendations.
You need to talk about his day to day budget, other savings, risk tolerance, what happens if he gets laid off, any other near term cash requirements, etc.
Don't present the solution before you know what the problem is. You may know a lot more than what is presented here, but it is important to know a lot more.
For instance, if he doesn't have 3-6 months of living expenses in the bank, that has to be a priority. If his job is at risk, I would like to see that be a bit longer.
If he has debt he is paying off at 25% interest and barely making ends meet, that might be a priority.
Sometimes pointing out some obvious 'must-do' type things is better than getting the commission check. It might not benefit you right away, but in the long run, it is the right thing to do.
On the other hand, if this is truly extra money, then find out what his goals are and help him achieve them.
Dan
Dan, he owns his own business, it is a one man operation body shop on his own property. He inherited his home and 350+ acres from his grandfather. He has no debt, no mortgage, no car payments, etc, he only has utility and business expense's which are covered since he is a one man operation. Look, he does not have to worry about living expenses etc for now but like the rest of us, we all like to know we have access to money if we need it.
Dan, he owns his own business, it is a one man operation body shop on his own property. He inherited his home and 350+ acres from his grandfather. He has no debt, no mortgage, no car payments, etc, he only has utility and business expense's which are covered since he is a one man operation. Look, he does not have to worry about living expenses etc for now but like the rest of us, we all like to know we have access to money if we need it.
Sounds like he could use a good disability policy....anyway, I also thought you were referring to your friend being 70 years old, my mistake. If he puts the money into an annuity at age 38, he'd have to roll it over for the next 22 years before he could touch it as well, unless he wants to pay the 10% penalty and income tax, so that may not be the best option. Is there a specific reason his CPA told him to put the money into a life insurance policy with an ILIT? Very strange case indeed....
I'm not sure I understand what the problem is with where the money is at now. While GA is not a community property state, the basic rules apply "assets acquired prior to marriage belong to the person who brought them into the marriage". It's the same in CA which is a community property state. Only assets acquired DURING the marriage are the property of both spouses.
Is there a reason why the money in the MM account would be considered marital property since he owns it outright now? I could understand that future interest "might" be once he is married, but not the principal.
Or is he trying to shield that money so that if he dies she does not inherit it?
I have only had my insurance license for one week and I have a friend who is getting married in late November and is doing on prenup however he also has over $100K in a money market that he wants to move over to some kind of insurance product that he can own so that when he is married, this is considered his going into the marriage. I do not work for an agency, I have a full time outside sales job and I am just doing insurance for extra cash. I am thinking about doing a SPWL or an annuity for him but I dont know if I want to consider a long term annuity. Any suggestions?
Thanks,
Larry
What state is he in? Generally speaking prenups become less effective in community property states after 7 years. If he's not in a community property state, then what does it matter where he puts his money in? I'm thinking SPWL was your idea and not his. If he's in a non-community property state, he needs to keep his prenup assets completely separate to avoid co-mingling of funds.
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