William Penn Life, 1998 (33. évfolyam, 1-12. szám)

1998-01-01 / 1. szám

Page 2, William Penn Life, January 1998 William Penn LIFE Official Publication of the William Penn Association Published Monthly Office of Publication: 709 Brighton Road Pittsburgh, PA 15233 Phone: 412/231-2979 Third Class U.S. Postage Paid Pittsburgh, PA Permit No. 2724 George S. Charles, Jr. Editor-in-chief Richard W. Toth Diane M. Torma Associate Editors John E. Lovász Managing Editor NATIONAL OFFICERS George S. Charles, Jr. National President Richard W. Toth National V.P.-Secretary Diane M. Torma National V.P.-Treasurer BOARD OF DIRECTORS Michael J. Hrabar Chairman Roger G. Nagy Vice Chairman Elmer A. Furedy Vice Chairman Anthony C. Beke Louis A. Fodor Barbara A. House Michael R. Kara Andrew W. McNelis George F. Mirkovich Michael F. Tomcsak Elmer W. Toth Frank J. Wukovits, Jr. Frank J. Radvany Secretary of the Board AUDITING COMMITTEE Robert A. Ivancso Chairman Margaret H. Boso Secretary Dennis A. Chobody Charles J. Furedy Joseph Hamari Ernest J. Mozer, Sr. CONSULTANTS Bruce &. Bruce Company Actuary Horovitz, Rudoy Sc Roteman C.P.A. Rothman Gordon Foreman & Groudine, P.C. General Counsel Dr. Julius Kesseru Medical Director Unsolicited articles, letters, manuscripts, pictures and other material submitted to the WILLIAM PENN LIFE are forwarded at the owner’s risk, and the WILLIAM PENN LIFE expressly denies any responsibility for their safekeeping or return. The WILLIAM PENN LIFE reserves the right to edit, revise or re)ect any article submitted for publication. Postmaster: If undelivered, please send form 3579 to: William Penn Association 709 Brighton Road Pittsburgh, PA 15233 Discovering Tamie Helen and Ernie Molnár of Branch 18 Lincoln Park, Mich., share a mo­ment with their “new” granddaughter, Tamie Moore. Tamie, 14, is the daughter of the Molnár ’s late son, Joey, who died in an accident three months after Tamie was conceived and without knowing he was the fa­ther. The story of how the Molnár ’s learned of their granddaughter ap­peared in the December 1997 William Penn Life. Helen Werling marks 40 years as WPA Home Office employee We extend our heartiest congratu­lations and most heartfelt apprecia­tion to Helen J. Werling, secretary to the National President, who will celebrate her 40th anniversary of employment with the Association on Jan. 28. Helen began working at the Home Office just two months shy of her 18th birthday and for four decades has served our soci­ety and its membership with pride and dedication. We send out our best wishes to Helen, her husband William (Buzz) Werling, and her entire family. Surprise your loved ones with a special message to them in the February issue of the William Penn Life. For a donation of at least $2.00 to our Scholarship Fund, you can tell your Valentines (and all our readers) how much you think of them. Just jot down your message in 15 words or less and send to the address below by January 26. Your Name: Address: City: State:Zip: Phone: Your Message: N. Make donations payable to: “William Penn Fraternal Association Scholarship Foundation, Inc.” Send message and donation to: Valentine’s Day William Penn Association 709 Brighton Road Pittsburgh, PA 15233 Insurance policies as part of your estate By Emil W. Herman, Esq., General Counsel______________________________ A member of Branch 18 from Birmingham, Mich., has asked me to dis­cuss irrevocable life insurance trusts, and I am happy to oblige. Many people are unsure how to treat life insurance when valuing their estates. In this and next month’s articles, I hope to help you understand how life insurance can be both a benefit and a detriment to your estate plan. My focus will be the typical life insurance policy you may have purchased from an agent, or which your employer provided as a part of an employee benefit plan, allowing you to name the beneficiary of the policy. A life insurance policy is a contract between you and the insurance company. You, or your employer, agrees to pay the insurance company a certain amount of money over a period of time (the “premium payments”) and the insurance company agrees that it will pay the person or entity you name (the “beneficiary”) a specific amount of money (the “proceeds”) when you die. You may name a spouse, children, a charity, or even your own estate as the beneficiary of the life insurance policy, or you may name more than one person or entity, specifying the percentage of the proceeds each beneficiary should receive. The beneficiary you name is considered a “third party beneficiary” with rights to enforce the contract between you and the insurance company, even though the beneficiary has no obliga­tions under that contract. A life insurance policy can be a benefit for your estate if your estate is named as the beneficiary, because the proceeds of the life insurance policy can be used to pay inheritance taxes due as a result of your death, or pay other costs of estate administration, without requiring the liquidation of your estate assets to satisfy those taxes and costs. A life insurance policy can also be a means of providing for a person or entity after your death, without affecting your basic estate plan. In divorce settlements, a spouse is often required to purchase and maintain a life insurance policy on his or her life, naming the children of that mar­riage, or the former spouse, as beneficiaries. Some people purchase a life insurance policy and name a charity as the beneficiary, thus providing a sizeable donation to that charity at death, with minimal premium pay­ments during the insured person’s lifetime. Without careful planning, however, those policies which you purchase and pay for during your lifetime can have a very detrimental effect on your estate plan. Unless you name your estate as the beneficiary of your life insurance policy, the proceeds of that policy will not be part of your probate estate. As such, those proceeds will not be available to pay the administrative costs and other debts of your estate. Nor will the proceeds be available to satisfy any bequests in your Last Will. Rather, they will be distributed as stated in your beneficiary designation on file with the insurance com­pany. Even though the proceeds are not part of your probate estate, how­ever, they may be taxed upon your death. In calculating federal inherit­ance tax, proceeds of life insurance policies owned by the decedent are considered part of the taxable estate, and many states impose an inherit­ance tax on those proceeds as well. If those proceeds, when added to the other assets of your estate, cause your estate to exceed the threshold amount for imposition of federal inheritance taxes ($600,000 in 1997 and $625,000 in 1998), it can pose a serious problem for your estate. Imagine that you had a probate estate consisting of your house ($250,000 fair market value), some savings and stocks ($50,000), and miscellaneous other assets ($10,000). The size of such an estate would not require sophisticated tax planning, because it would not meet the threshold amount at which federal estate taxes would be imposed. If, however, your employer generously paid the premiums on a $ 1 million life insurance policy for which you are considered the owner, your estate would have a gross taxable value of $ 1,310,000 and be subject to federal inheritance taxes. If the estate is $1,310,000, the rate would probably be 38 percent, but the federal inheritance tax rate is graduated, to a maxi­mum of 55 percent for estates in excess of $3 million. Your estate would have to pay those inheritance taxes, but, unless you named your estate as the beneficiary of that insurance policy, the benefi­ciary of those proceeds may not be required to contribute all or any por­tion of those proceeds toward the inheritance tax bill. Instead, your per­sonal representative might be forced to liquidate all or a significant por­tion of your estate (including the family residence) to pay those federal estate taxes. This is certainly not a result that you, or the beneficiaries under your Will, want to occur. By placing your insurance policies in an irrevocable life insurance trust, however, you may be able to exclude them from taxation at your death and at the death of your spouse. In our next article, we will discuss what is required to create an effective irrevocable life insurance trust, and how it may be an essential part of your estate plan. If you have any topics you would like us to consider for this column, please send them to: Managing Editor, William Penn Life, 709 Brighton Road, Pittsburgh, PA 15233. Topics will be considered based on space considerations, interest to all readers and appropriateness for general legal discussions.

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