Advanced Markets Archives - Page 6 of 6

Incapacity Planning: Preparing Clients for More Than Death

September 26, 2026January 12, 2021 by Tim Fuller

Advisor and client reviewing an advanced markets estate planning strategy in a private office

Planning tends to focus on what happens at death: wills, trusts and life insurance. Yet many clients will face a period when they cannot manage their own affairs first. Incapacity planning makes sure the right people can act, with the right documents and the right funding.

Key takeaways

Incapacity can be physical, mental, or even practical, such as extended travel or distance.
A durable power of attorney, revocable trust and health care directives are the core documents.
Long-term care and disability insurance provide the funding that makes an incapacity plan work.

If a client does not make an incapacity plan, a court may make one for them through a costly guardianship process.

Incapacity takes many forms

Incapacity is not only mental decline. A client may be unable to manage affairs due to a temporary or permanent physical condition, or simply because they are traveling or live far from their assets. Good planning delegates authority for all of these situations, not just cognitive impairment.

Financial documents

Durable power of attorney. Can be broad or narrow, effective immediately or on a triggering event, and remains valid if the principal becomes incompetent.
Revocable living trust. Often used to avoid probate, it can also give a co-trustee or successor trustee authority over trust assets.
Be careful with joint ownership. Joint owners’ responsibilities are undefined, some transactions require all owners to agree, and adding a joint owner may create gift issues.

Health care documents

Names vary by state, including health care directives, living wills, health care proxies and medical powers of attorney. Properly drafted, they should:

Name who will make health care decisions for the principal.
Specify who will make life-sustaining or end-of-life decisions.
Grant HIPAA authorization so decision-makers can obtain medical information.

Choosing the right fiduciary

Documents are only as good as the people named in them. When choosing an agent or trustee, consider:

Location. Will they be available when needed?
Lifestyle. Do they have time to take on the responsibility?
Experience. Can they handle the affairs they will oversee?
Track record. Have they been trustworthy and dependable?

For more on this decision in a trust context, see our post on choosing a trustee.

Funding the plan with insurance

Incapacity is expensive. Close to 70% of people turning 65 will need some long-term care, and disability during working years can stop income entirely. Long-term care and disability insurance make sure the people named in the documents have the money to carry out the client’s wishes. See our post on long-term care costs.

Frequently asked questions

What documents are needed for incapacity planning?

Typically a durable power of attorney, a revocable living trust where appropriate, and health care directives including a HIPAA authorization. Clients should work with an attorney in their state.

Why is joint ownership a risky incapacity plan?

Joint owners’ duties are undefined, some transactions need all owners to agree, and adding an owner can trigger gift tax concerns.

How does insurance fit into incapacity planning?

Long-term care and disability insurance provide the funds to pay for care and replace income, so the client’s fiduciaries can carry out the plan.

50+ Years in Business60+ Top-Rated Carriers★★★★★ Rated by Advisors

Reviewed by Tim Fuller on 2026-09-26

Tim Fuller

President, SRS Inc.

Tim leads SRS Inc., a full-service IMO (Independent Marketing Organization) and BGA (Brokerage General Agency), connecting independent financial professionals with life, annuity, disability income, and long-term care solutions from 60+ carrier partners.

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Restricted 162 Executive Bonus Plans for Small Businesses

September 26, 2026January 11, 2021 by Tim Fuller

The Section 162 executive bonus plan is one of the simplest benefits a small business can offer. Some employers hesitate because the employee owns the policy outright. A restricted executive bonus plan gives the employer a measure of control without losing the deduction.

Key takeaways

A standard 162 bonus is deductible as reasonable compensation, flexible and simple to administer.
A restrictive endorsement limits the employee’s access to policy values for a set period or until a set age.
Use restrictions sparingly, and consider pairing them with a double bonus so the plan stays attractive to the employee.

The endorsement must never give the employer ownership rights, or the premium deduction is at risk.

Why employers like 162 bonus plans

The business pays a bonus that the employee uses to pay premiums on a policy they own. As long as total pay is reasonable compensation, the bonus is generally deductible. The employer chooses who participates, how much each receives, and can adjust contributions over time. Reporting requirements are minimal.

The employer’s concern: no golden handcuffs

Because the employee owns the policy, some employers worry that bonuses are money out the door. There is nothing tying the employee to the company, and the employee might surrender or borrow against the policy irresponsibly.

How a restrictive endorsement works

In a restricted plan, the employee signs an endorsement that becomes part of the policy. The employee agrees not to exercise certain ownership rights, such as surrenders, loans or withdrawals, for a period of years or until a certain age.

Critically, the endorsement must not grant the employer any ownership rights. If the business holds rights in the policy, its deduction for the bonus could be jeopardized. For vesting design ideas, see our post on vesting schedules in executive bonus plans.

Use restrictions sparingly

The employee pays tax on the bonus but cannot access the policy freely, which can make the benefit feel less valuable.
In some cases, restrictions can backfire and weaken loyalty instead of strengthening it.
A double bonus, which grosses up the bonus to cover the employee’s tax, keeps the employee’s cost at zero and the plan compelling.

Reserve restricted plans for employers with a strong control concern. Either way, executive bonus is an excellent small-business sales concept. Contact us for design help.

Frequently asked questions

What is a restricted executive bonus plan?

It is a 162 bonus plan in which the employee signs an endorsement agreeing not to access certain policy values for a set period, giving the employer some control.

Does a restrictive endorsement affect the employer’s deduction?

It should not, as long as the employer receives no ownership rights in the policy. If the employer holds ownership rights, the deduction could be at risk.

What is a double bonus?

The employer pays an additional bonus to cover the employee’s income tax on the premium bonus, so the employee has no out-of-pocket cost.

50+ Years in Business60+ Top-Rated Carriers★★★★★ Rated by Advisors

Reviewed by Tim Fuller on 2026-09-26

Tim Fuller

President, SRS Inc.

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Buy-Sell Planning When Partners Are Different Ages

September 26, 2026January 5, 2021 by Tim Fuller

Partnerships between a younger entrepreneur and a more experienced owner are common, and they often work well. But when it is time to fund a buy-sell agreement, the age gap can create real sticker shock. With the right design, that cost difference does not have to derail the plan.

Key takeaways

In a cross-purchase buy-sell, the younger partner often pays much more to insure the older partner.
Term insurance can lower cost when the buy-out need will end before life expectancy, with conversion as a backup.
A double bonus from the business can equalize the after-tax cost for both partners.

Each partner gets exactly the same thing from a buy-sell: a fair price for their heirs or the funds to buy out a partner.

Why age gaps create sticker shock

Clients expect some difference in premium due to age, but the gap is often larger than they anticipate. The older partner may also have health changes that raise the rate class. In a cross-purchase design, where each partner owns and pays for a policy on the other, the younger partner ends up paying far more.

For a refresher on the structure, see our post on cross-purchase buy-sell agreements.

Solution one: use term insurance

If the buy-out need will last for a measurable period shorter than life expectancy, such as until a planned retirement, term insurance can lower the upfront cost considerably. Most term policies can be converted to permanent coverage if the need lasts longer than expected.

Solution two: double bonus the premiums

The business can pay each partner a bonus large enough to cover both the premium and the income tax on the bonus. That creates a zero after-tax outlay for each partner and shifts the overall cost of the transition plan to the business, where it is shared in proportion to ownership rather than age.

Focus on what each partner receives

Help partners see the value, not just the cost. Each gets either the assurance that heirs will receive a fair cash price for the business interest, or the funds to buy out a deceased partner and own the business outright. The benefit is identical and exactly what each needs.

An uninsurable partner presents different challenges, but a difference in age or health class should not stop a buy-sell. Contact us with any buy-sell funding question.

Frequently asked questions

How do you fund a buy-sell when partners are different ages?

Common approaches include using term insurance for a defined need and having the business pay a double bonus so each partner’s after-tax cost is equal.

Is term insurance appropriate for buy-sell funding?

It can be when the buy-out need is expected to end before life expectancy, such as at a planned retirement. Convertible term keeps permanent coverage available later.

What if one business partner is uninsurable?

Alternatives include funding with other assets, a sinking fund, installment payments, or disability buy-out coverage where available. Contact us to review options.

50+ Years in Business60+ Top-Rated Carriers★★★★★ Rated by Advisors

Reviewed by Tim Fuller on 2026-09-26

Tim Fuller

President, SRS Inc.

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The Three Core Estate Planning Documents Every Client Needs

September 26, 2026December 29, 2020 by Tim Fuller

Every state has laws that decide what happens to a person’s money, medical care and children when that person hasn’t written down their own wishes. Three basic documents let clients make those decisions themselves. Advisors are well placed to ask whether those documents exist, and that one question can deepen a client relationship.

Key takeaways

A durable power of attorney, a health care directive and a last will and testament are the three foundational documents for almost every client.
Without them, state law and the courts decide who manages assets, who makes medical decisions and who raises minor children.
Advisors don’t draft or interpret these documents, but asking whether they exist and are current is a valuable service and often leads to broader planning.

If your clients don’t take the time to plan correctly, state law is poised to do it for them, and rarely the way they would have chosen.

Why advisors should raise the topic

In the most important episode of his life, Paul Revere didn’t fire a shot. His job was to sound the alarm. Advisors often play a similar role. Clients don’t wake up thinking about powers of attorney, but they trust the professional who reminds them before a crisis makes the question urgent.

Asking about planning documents widens your role beyond products. It shows you care about the whole picture, and the conversation frequently uncovers needs for life insurance, beneficiary updates or long-term care planning.

The three documents, in plain English

Durable power of attorney. Names an agent (attorney-in-fact) who can handle financial transactions for the client under the terms the client sets, including if the client becomes incapacitated.
Health care directive. Sometimes called a health care proxy, living will or durable power of attorney for health care. It appoints someone to make medical decisions if the client can’t, and can record the client’s treatment wishes.
Last will and testament. Lets the client decide who receives the assets they own, who manages those assets, who they prefer as guardian for minor children, and who serves as trustee of any trusts the will creates.

What happens when the documents are missing

Every state has legislation that fills the gap. If a client becomes incapacitated without a power of attorney, family members may need a court-supervised guardianship or conservatorship just to pay bills. If a client dies without a will, state intestacy rules decide who inherits, and a court chooses the guardian for minor children. These defaults are slower, more public and more expensive, and may not match what the client wanted.

For a deeper look at the incapacity side, see our article on incapacity planning.

How to start the conversation

Add a simple question to your annual review: “Do you have a current will, power of attorney and health care directive?”
Ask when they were last updated. Marriages, divorces, births, moves to another state and deaths of named agents all call for a review.
Check that beneficiary designations on life insurance, annuities and retirement accounts line up with the will, since those designations generally pass outside it.
Refer clients to their own attorney to draft or update documents.

Neither SRS nor you practices law or gives legal advice. We’re happy to look at a client’s existing documents with you so you can point them in the right direction before they meet with legal counsel.

Frequently asked questions

What are the three basic estate planning documents?

A durable power of attorney for finances, a health care directive (also called a health care proxy or living will), and a last will and testament. Together they cover financial decisions, medical decisions and the distribution of assets at death.

What happens if a client dies without a will?

State intestacy laws decide who inherits the client’s probate assets, and a court appoints a guardian for any minor children. Assets that pass by beneficiary designation, such as life insurance, generally still go to the named beneficiary.

Can a financial advisor help clients with wills and powers of attorney?

Advisors shouldn’t draft or interpret legal documents, but they can ask whether the documents exist, flag when they may be out of date, and refer clients to an attorney. That question alone adds real value.

50+ Years in Business60+ Top-Rated Carriers★★★★★ Rated by Advisors

Reviewed by Tim Fuller on 2026-09-26

Tim Fuller

President, SRS Inc.

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What Happens When a Client Dies Without a Will: Why Documenting Intentions Matters

September 26, 2026December 23, 2020 by Tim Fuller

All 50 states effectively say the same thing about a client’s planning goals: if they aren’t written down, they didn’t happen. When a client dies or becomes incapacitated without the right documents, state law fills in the blanks. Helping clients understand those defaults is often what finally gets them to act.

Key takeaways

Estate planning isn’t just for the wealthy. Everyone has people and property that would be affected by death or incapacity.
Without written documents, state intestacy and guardianship laws decide who inherits, who manages money and who cares for minor children.
Advisors can encourage clients to complete their core documents with an attorney and make sure beneficiary designations support the plan.

If a client’s wishes aren’t written down, then as far as the state is concerned, they didn’t happen.

“If it isn’t written down, it didn’t happen”

Thriller fans may recognize that line from Tom Clancy’s novels, where Jack Ryan’s wife, a busy physician, writes everything down to keep track of everyone’s commitments. Whole productivity programs have been built around the idea. State legislatures got there first. When it comes to a client’s estate, what isn’t documented doesn’t count.

Who needs estate planning?

Everyone, not just the wealthy. Every client has concerns about what happens to themselves, their survivors and their belongings after death or a serious illness. A young parent needs a guardian named for their children. A retiree needs someone authorized to manage accounts if dementia sets in. A business owner needs a plan for their share of the company.

What the state decides when there’s no plan

Who inherits: State intestacy rules distribute probate assets by a fixed formula, which may not match the client’s wishes, especially in blended families.
Who manages the estate: A court appoints an administrator.
Who raises minor children: A judge chooses the guardian.
Who handles money and medical care during incapacity: Without a power of attorney and health care directive, family may need a court-supervised guardianship or conservatorship.

For the three documents that prevent these outcomes, see the core estate planning documents every client needs.

How advisors can help

Ask every client whether they have a current will, power of attorney and health care directive, and refer them to an attorney to complete or update them. Then review beneficiary designations on life insurance, annuities and retirement accounts, since those generally pass outside the will. Our article on the beneficiary review walks through that step. Contact us if you’d like help discussing these documents with clients.

Frequently asked questions

What happens if someone dies without a will?

State intestacy laws decide who inherits the person’s probate assets, a court appoints someone to administer the estate, and a judge chooses a guardian for any minor children.

Does life insurance go through probate if there’s no will?

Generally no. Life insurance paid to a named, living beneficiary passes outside the will and probate. If the beneficiary is the estate, or no beneficiary survives, the proceeds may become part of the probate estate.

Do young or middle-income clients need estate planning?

Yes. Anyone with children, property, retirement accounts or people who depend on them benefits from a will, power of attorney and health care directive.

50+ Years in Business60+ Top-Rated Carriers★★★★★ Rated by Advisors

Reviewed by Tim Fuller on 2026-09-26

Tim Fuller

President, SRS Inc.

Connect on LinkedIn →

Incapacity Planning: Preparing Clients for More Than Death

Incapacity takes many forms

Financial documents

Health care documents

Choosing the right fiduciary

Funding the plan with insurance

Frequently asked questions

Tim Fuller

We’re Here to Help

Why employers like 162 bonus plans

The employer’s concern: no golden handcuffs

How a restrictive endorsement works

Use restrictions sparingly

Frequently asked questions

Tim Fuller

We’re Here to Help

Tim Fuller

We’re Here to Help

Tim Fuller

Tim Fuller