20 • A LEGAL LOOK / BOOK REVIEW
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Life insurance as a part of an estate plan A LEGAL LOOK
by Michael Ganson In even a relatively modest estate, life insurance should be considered as a potentially important aspect of estate planning since it can substantially increase the value of your estate. In addition, where the death of a person is premature leaving a family with young children who are in need of support, life insurance may be the principal means for the family’s financial survival. Life insurance in larger estates are often useful by providing liquidity necessary to pay estate taxes and expenses without the necessity of selling off assets a family would prefer to retain. Additionally, life insur-
ance does not have to go through a time-consuming administrative process before its proceeds become available to beneficiaries. Indeed, sometimes life insurance can be the only immediate source of funds for a surviving family. One object of any estate planning is to minimize the estate tax effect, if any, that life insurance can potentially have. The primary tax issue that arises is whether the insurance proceeds are included in the estate for estate tax purposes. In fact, including the proceeds can sometimes generate additional estate tax liability and even reduce the amount of the proceeds available to beneficiaries upon the insured’s death. The rule is that gross estate will include the value of life insurance proceeds if A) the proceeds are payable to the decedent’s estate, or B) the proceeds are payable to other beneficiaries, but the decedent possessed at death any of the “incidents of ownership” with respect to the policy. “Incidents of ownership” is not limited to the legal ownership of the policy. The phrase
includes the power to change beneficiaries, to surrender or cancel the policy, to assign the policy or pledge it for a loan, or to even obtain a loan from the insurer against the surrender value of the policy. It even includes indirect ways a decedent can be found by the government to possess “incidents of ownership;” such as, where the decedent is the owner of a corporation that possesses one of the “incident of ownership” described above. Indeed, life insurance proceeds may even be included in the estate under certain circumstances where a transfer of the policy by the decedent as the initial owner was made to another person or entity within three years of the decedent’s death. Thus, even “incidents of ownership” prior to transfer of the policy may be included under this three year window. A common method for handling the life insurance aspects of an estate plan is the use of a life insurance trust. Usually, the person initiates life insurance coverage by acquiring a policy. After acquiring the policy, all “incidents of ownership” would
be transferred to a previously created irrevocable trust which would be the named beneficiary on policy. As long as the person survives at least one day more than the three years after the transfer of the policy to the trust, the proceeds would not be included in the decedent’s estate. Unfortunately, if the policy is transferred within three years of death, the proceeds may very well be included in the estate. Of course, if the trust itself acquired the policy, the insured life would never be the owner of the policy and the three-year window would not apply. Unfortunately, in this situation, the insured could neither direct nor require the trust to acquire the life insurance policy without risking the possibility of being regarded by the government as the original owner of the policy under the three-year window rule. Therefore, it is of utmost importance that the trustee be completely independent of the insured. An irrevocable life insurance trust can also serve as a means of coordinating the collection, investment, and distribution of
the proceeds of several policies. In addition, an irrevocable life insurance trust can hold other assets transferred to it during the life of the decedent. Furthermore, the trust can also receive assets designated in decedent’s will after death. In conclusion, it is very important to consider the inclusion of life insurance is a part of your estate plan. It should be carefully integrated with the other aspects of an estate plan. The guidance of a qualified professional should be retained to assist you in incorporating life insurance as a part of your estate plan. The information contained in this article is intended to provide only general legal information and is not intended to be relied upon for specific legal issues or any particular legal matters. For specific legal issues or any particular legal matters, the reader is advised to consult with and secure the legal advice of an attorney of their choice.
Book Review: Journey of Ashes: A Boyhood in the Holocaust A Child Survivor Recalls the Liberation of Auschwitz By Anna Ray-Jones Roman Ferber
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January 21, 2015, Monroe Township, NJ. This year marks the 70th anniversary of the Soviet army’s liberation of Auschwitz, an event that freed over 7,000 remaining prisoners. Among them was Roman Ferber, who, at 12-years old, was one of the youngest Jews on Schindler’s list, and a rare juvenile inmate of the death camp along with his 8-year old cousin, Wilús Schnitzer. By his twelfth birthday, Roman, (now a resident of Monroe Township, NJ), had been a prisoner in the Krakow Ghetto, and the camps of Plaszow, Gross Rosen, Brinnlitz, and Auschwitz. Thanks to his brother, Manek Ferber’s friendship with Oskar Schindler, Roman found himself on the famous list with his father and his young cousin, Wilús. However, it didn’t save the two boys from being exiled to Auschwitz where child inmates didn’t last long.
January 27, 1945, the day of the Auschwitz liberation is forever etched in his memory. “The Nazis had already sent my father and the men in his barrack on a forced march to Germany,” says Roman, (now a man in his eighties), “but Wilús and I slipped away and hid in an electrical station until the last soldiers had left. The actual day of freedom was unreal. I remember a Voroshilov tank lumbered toward the camp’s main gates. Tethered to its rear was a handsome young captain
towed along on skis. He was followed by a huge contingent of Russian infantry from the 60th Army. More tanks arrived, and to my cousin’s delight, warriors on horseback!” “The prisoners give a mighty cheer and threw open the gates. Shouts rose up in a babble of Polish, Yiddish, and other tongues mixed with the musical rumble of Russian. The sturdy soldiers mingled enthusiastically with the prisoners, embracing us and shaking our hands. “It’s over, Comrade, you are
free…free!” they chorused. Their warmth and kindness caused many of the inmates to break down and weep--it had been so long since any one had regarded us as human beings.” “Women battalions also came striding through the gates. I recall my cousin being hoisted onto the shoulder of a pretty lady lieutenant and more female militia were kissing and hugging all the kids. “Malchic, Malchic, Little guy, little guy,” they called out to us. “All is well, we are here!” Roman’s first reaction was one of sheer exhilaration. He recounts seeing Wilús whooping and calling out to him from the perch of his Russian beauty, the color returning to the boy’s cheeks. The first wave of liberators was followed by heavily laden supply trucks, ambulances and mobile medical units. A swarm of Russian nurses and doctors mingled with the internal medics, asking a host of questions regarding the health of the inmates. “Russian soldiers arrived by the hundreds,” comments Roman. “The platoon’s General was a thin bespectacled Marxist, all brisk efficiency. He entered the camp riding an excellent chestnut horse, directing many things to be done at once. There
were cameras and news reporters shooting photographs and filming. One cameraman wanted to film prisoners pouring joyously through the open gates and when we didn’t look delighted enough, he had us repeat the same actions several times until he too was overcome with happiness. “ Roman’s experience of the Auschwitz liberation is a defining moment in his biography. “The sudden realization that we were totally free from threats and brutality filled us with delight, bewilderment and anxiety. We could hardly believe it but after all the years of the occupation and imprisonment, we were finally going home. I hoped, against all odds, that my young cousin and I would find some family still alive waiting to welcome us. “ The end result was bittersweet. Wilús Schnitzer was already an orphan, his parents having been murdered by Amon Goeth in Plaszow. Roman’s father, Leon Ferber, was executed on the death march to Flossenburg, and it would be another year before Roman was finally reunited with his mother and sister, also survivors and former inmates of BergenBelsen.