Examples of life resource plans

Examples of Life Resource Plans

Below are 4 samples of Life Resource Plans based on actual plans we have produced as a Society. These plans are for individuals who are not real. Although all 4 plans are focused on couples, large numbers of our plans are also done for single individuals. Each of these plans demonstrates an application of Life Resource Planning under certain circumstances. By far, these do not represent all applications of Life Resource Planning. There are many more issues out there to deal with than these plans reveal. This is just a sample to see how valuable the planning can be. As one of these plans demonstrates, there do not have to be assets in order to do the planning. We do numerous plans for people who do not have assets.

With each plan below we will explain the circumstances and offer a brief explanation of the various strategies that were recommended. You can then click on each link below to open the entire PDF file and study each plan to see how it addresses the various issues in detail.

Plans produced by the Society for Life Resource Planning average about 225 pages. These pages are divided in a three ring binder under 3 different tabs. The first tab contains the analysis and recommendations. The first tab will usually consist of anywhere from 15 pages to 40 pages depending on the complexity of the plan.

The second tab contains 14 pages of instructions on how to put together a family care plan and family care agreement. If the family decides to use a geriatric care specialist to help plan for long term care, the specialist will use the information from tab #1 and this tab to put together a care plan for this purpose.

The third tab contains a textbook entitled "Understanding the Fundamentals of Life Resource Planning," which was written specifically for the education of the plan recipient and for the family. It contains valuable information about all kinds of issues pertaining to aging seniors and their families. The textbook is 178 pages long.

Sample Plan #1

Mary Smith age 69 and Larry Smith age 74. Children live nearby to help them with care issues. They have $348,000 in retirement savings – not including their home – and $71,730 in annual income. Mary has significant health issues. Their assets will be entirely depleted within four years if Mary needs serious long term care services. If they choose care at home, they can pay off their primary mortgage through a reverse mortgage and have some additional cash to fix up the home. They can also do some planning now to convert assets to income and divest assets in order to have Medicaid step in sooner and cover the cost of care. This planning will also allow them to preserve some of their assets from Medicaid spend down. Larry is a veteran and if he ever develops serious disability problems connected to service, he might be able to obtain extra income. He is not a war veteran and could not qualify for Pension Aid and Attendance. Currently, he does not qualify for any VA disability benefits either for him or his wife. Part of this planning includes putting $10,000 each into Medicaid funeral trusts.

Click here to download this PDF plan

Sample Plan #2

Ralph Brown age 67 and Gertrude Brown age 64. Children live nearby to help with care if it is ever needed. Ralph and Gertrude both have significant health problems. They will soon be in need of long term care services. They own a home but have no other assets. They earn $70,900 a year which includes $23,800 a year for Ralph for his service-connected disabilities as a veteran. Ralph is unaware of an additional VA disability benefit called Individual Unemployability which could add $14,112 a year to his income. In addition, because he is housebound, he could get about $4,000 more a year on top of everything else. He might also develop the same $14,112 a year by applying for more service-connected disabilities at which point he could be eligible for an aid and attendance benefit of about $11,000 more a year on top of everything else. The planner will make sure that he gets assistance finding this extra income. Overall, he has the potential of adding about $25,000 more a year in income from the Department of Veterans Affairs.

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Sample Plan #3

Dirk Heilman age 88 and April Heilman age 73. This is a second marriage for each and they have a blended family. Proper estate planning must be done in order to ensure that the inheritances go to the right children of which there are 6 from previous marriages. Dirk has tried to take care of April by purchasing a significant life insurance policy for $300,000 and by purchasing long term care insurance for both of them which will help if he ever needs care. They also own about $221,000 in retirement assets between the two of them, but they have purchased a new home with a $225,000 mortgage. Dirk is planning on the insurance to take care of the mortgage or to assist April when he dies. They make $67,200 a year between them, but if Dirk dies, April's income drops to about $32,600 a year. Since Dirk is a war veteran, if April needs long term care services, they could bring in $12,652 a year from Pension Aid and Attendance in order to pay for her care. If Dirk needs long term care services they could bring in $25,022 a year to help cover his care. They can coordinate this veterans benefit with their long term care insurance. Currently, they are both in good health. They have a dilemma. Several years ago after they got married, Dirk purchased the life insurance policy without a guaranteed death benefit. The policy is eating itself inside out. Currently he is paying $15,600 a year in premiums and the policy has about $65,000 in cash value. Because there is no guarantee, within five years there will be no cash value and his premiums will have increased to $37,000 a year. The next year the premiums will be about $55,000 a year again with no cash value and each year premiums go up. He has to die within five or six years or they will not be able to afford the policy. This risk was not disclosed to them when they purchased the insurance.

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Sample Plan #4

Brenda Jack age 58 and Clive Jack age 59. They are both currently employed and bring in about $160,000 a year in income. They also have investments and retirement savings of about $440,000. About 60% of this is in tax qualified retirement accounts and they are adding significant amounts to these accounts probably in order to save income taxes at their higher tax rates. Since life resource planning is a snapshot at an older age when seniors are losing independence or are anticipating losing their independence, we had to project their income and assets into the future in order to take this snapshot. We did this as best we could and then did the analysis. We took this snapshot at age 80 and 81 respectively. Our conclusion was that they are putting too much money into tax qualified accounts. Our experience with doing these plans and with folks who have large amounts in tax qualified accounts has shown that they may save taxes when they are working, but when they are retired these accounts are a great burden. This is not only true for tax purposes but also for estate planning purposes. The analysis centered around their planning for long term care which for most of us is inevitable. Suggestion was made to purchase long term care insurance under state partnership as part of this planning since they are young enough and healthy enough to afford it. Suggestion was made not to put any more money into tax qualified retirement savings except for the amounts that are matched by the employer. Clive only has a group life insurance policy and no other life insurance. This policy will disappear when they are older. Brenda has no life insurance. Suggestion was made to put $35,000 each into Medicaid funeral trusts in order to provide funds for burial and funeral in the future and also to do some preplanning to preserve assets from Medicaid spend down. Medicaid planning strategies were discussed and recommendations made for the future.

Click here to download this PDF plan