Life insurance

I was talking to a younger farmer friend and we got to talking about how certain operations locally got to be what they are today. I mentioned one operation and pointed out that when he was too young to care about such things the patriarch at the time had left his boys a very large sum of money via life insurance. How do I now this? Simple, the neighborhood insurance agent made this family his selling point to at least me. My friend is a very smart person but he had never given much thought as to insurance and its role of preserving and/or growing the business for the next generation. He is fortunate that he is plenty young to do something that will have a large impact in the future. I wish my ancestors had given this more thought but I am not sure how much they could have done. I was wondering if anybody had any stories to share as to how maybe a shrewd financial plan had positively impacted their business.

Not so much insurance but just good luck or investments: such as bought property for $16000 that is now worth millions!!!

I joke to Marilyn that I am worth more dead than alive. LOL My dad never has had much life insurance, maybe enough to bury him but that's it. He has never liked insurance companies and doesn't like to give them his money. Instead of paying life insurance premiums, he has disciplined himself and put the money into safe investments. He has been playing around with the markets for 70 years so he has had plenty of time to accumulate the profits and has done better than life insurance. Me? I've paid premiums.

Insurance can be a great tool for estate settlement, especially for one child to buy out or at least partially buy out non-farming siblings. Not the be-all, but one tool in a toolbox.

My thoughts on life insurance is if you want money after I die you pay for the insurance. Never got any form anybody else, not going to make anyone else rich.

(quoted from post at 20:11:08 11/24/15) My thoughts on life insurance is if you want money after I die you pay for the insurance. Never got any form anybody else, not going to make anyone else rich.

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25 years ago my 2 brothers and I took out a policy on my parents when we were planning on farming together. That didn't work out, but we kept the policy, and each did our own thing and became non-dependent on the family assets. It was a way to buy the equipment and land should something happen as there are 14 kids to divided things between. Well, mom and dad are still doing fine....I told the family that is one way to keep them with us! I think last year was the year when the cash value and death benefits would be a wash....it is thru NWML, so the cash value has done well. Maybe we will cash it in next year and throw a party.

If you have a child on the farm and off farm children you had better have life insurance or the farm will be sold before your cold in the ground. The out-laws (non family spouses) will make sure of it.

Life insurance is just one tool in a good estate plan. The trouble is everyone wants everything to be "fair/equal" when they setup their estate. In most cases there are some kids that help more than others. So what is fair is hard to define.

JDSeller I've thought a lot about this "be fair/equal" thing also. Everybody's situation and circumstances are a little different. Some need, earned, could benefit from, could expand, would take better care of, would appreciate, etc., more than others. I would appreciate hearing your thoughts on this in a new thread. Thanks.

Bingo.

"Being of sound mind, I spent every dime."

I see the most important thing to do is just to manage your money well. Now of course good management has many facets and I see insurance as one. Term life is good to have in your younger-middle aged years because it is affordable and gives your heirs only what they need, some cash to bridge over and pay the bills during the time that income would suffer without you. The problem with term is that it is not dollar efficient in later years, when should you die at say age seventy you want your spouse to be comfortable without you. This is where some whole life is beneficial, because it will still be there even though you may be uninsurable by that age.

I would say it is one thing to manage your money well and it is another thing to identify that you need two million dollars upon death for your kid to continue the business that has been in the family for generations. Around here there are next to zero jobs that pay the kind of income that would allow you to build two million dollars through the market unless you hit on the next Microsoft when it is still on the ground floor in terms of value.

INDEED Life Insurance can be part of a good estate plan. For young family income producers like a working husband, it is often recommend it should be at least 10 time the annual income or more. Then there's the whole argument as to the best long term value and quality of product if its invested in a Whole Life Policy versus a cheaper Term policy with other funds (available since term insurance is much cheaper) invested in say a mutual fund or cash or kept under the mattress or whatever IM NOT GOING INTO THAT ARGUMENT, DO AS YOU PLEASE, THERE ARE REASONS WHY AND WHY NOT FOR EITHER but I do know what my beliefs are (which I will keep to myself, Im NOT here to sell or propose one method over another or argue over it, do as you please). As a person grows older and has no debt, has plenty of cash reserves for final expenses, and his or her spouse has a sufficient guaranteed income if the other spouse dies, they could self insure at such time and/or may not carry as much yet still have enough if they want to leave an inheritance for their beneficiaries.

As far as "selling the farm" or the necessity of such and who gets what, I would advise my clients to address such an important and huge financial matter and deal with it in a good estate plan versus leaving it for spouse or kids or kids spouses to argue over PLAN AND DEAL WITH IT NOW so they don't have to or get the opportunity to !!!!!!!!!!!! SURE people can always argue and fight over it and contest a will blah blah blah which is a good reason to deal with it now (using a professional instead of your neighbor) so your property passes to those you wish and its most likely valid and legal and any court will uphold it. YES BILLY BOB I know anything can be challenged and anyone can be sued if a person is willing to spend huge bucks, all I'm saying is a "good" professional estate plan will more then likely be upheld by a court.

What many of my estate planning clients don't realize or haven't changed or considered in YEARSSSSSSSSSS is their beneficiary designations on life insurance policies (or other accounts also). They could name a specific beneficiary and contingent beneficiaries if the first is deceased or name their estate and let it be distributed according to their will or laws of intestate succession.

As far as children or spouses of ones children and their surviving issue inheriting and who gets what and how to avoid legal loopholes (to the extent possible) and if a will or trust or other methods to avoid probate or even no will at all and the consequences of beneficiary designations and joint ownership with rights of survivorship and Transfer on Death Statutes are all concerned (part of my job if a client wants an estate plan) CONSULT LOCAL COMPETENT PROFESSIONAL ESTATE ATTORNEYS instead of relying on Billy Bob or Bubba or your brother in law is my advice, now yall do as you please and think best, its your money and your risk NOT ANY OF OURS. You can choose a plan that's exactly right for another person (maybe terrible for you) or choose one that's best for you according to your wishes.

Best wishes and HAPPY THANKSGIVING

John T Country Lawyer

The thing I see locally is that the best results came from dad and/or mom taking care of things such as insurance and wills while young and updating as necessary. The best bang for the buck on insurance is do it while you are young where it takes up a small percentage of your income. Sometimes the kid in question to continue the farm comes along after dad and mom have turned age 30, 35, or older. It is going to be very uphill for a kid to start a policy on dad if he is 55 or 60 and has identifiable health issues based on family history to the insurance company. It all bols down to the objectives of the generation that currently owns the farm and the sacrifices they are willing to make to have it stay in the family.