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[Sheherezade]

I was under the impression that with a revocable trust set up correctly you can avoid probate because you have technically already passed your property into the trust. (The owner of the trust changes upon death but the trust stays put.) I was also advised that the trust should contain a incapacity clause in the unlikely event that your spouse *nearly* dies, but remains alive. Clearly, in that event, you wouldn't want to be dealing with the court system to get access to your family money.

I'm with you Jenn on the disablility insurance. Does anyone out there have a policy they like?

That makes sense about the trust, Angie. It's similar to the article I read. My mom was just talking to someone about this same subject! She thinks (and is going to find out) that real proberty has to be in the trust before death -- ex, deed of the house has to have the trust name as owner. Soooooo complicated!! But this probate stuff can be a HUGE PITA (even with a will!!!!) so I guess it can be worth it.

We have a policy on DH that I think is a good one. He also has access to long and short term disability through his employer but I think it makes more sense for us to own it personally. A few things to look into:

1. Is it specific to the occupation and in this case, his specialty. You would want this so that if you perform surgery and then have a hand disability, your insurer can't come back and tell you to do another medical specialty (that doesn't require the same use of your hands).
2. What if you can go back to work but not full-time? Do you get partial, pro-rated benefit?
3. What is the period of time to establish disability? I think DH's 90 days (or 180???). For this reason, we do use the short term disability coverage (first 90 days) through his employer.
4. We have some sort of rider to adjust the premium amounts -- lower when he is younger and higher when he is older. We just couldn't afford the level premium but it's not too bad.
5. We also have some sort of rider to increase the policy coverage up to a certain amount within a certain number of years witout another medical history. (Again, couldn't pay for the level of coverage we wanted long term but have the option to get it).

There are a few things about the employer based coverage I noticed. (This is for DH's current employer and also what I have found out about my MIL's employer-sponsored plan).

First, look at the fine print about how other disability coverage is accounted for -- the policy may cover what other providers do not up to 60-65% of pre-disability income (typical coverage levels but there might also be a max). So, if you make $5000 a month before disability, and get $1200 a month from Social Security disability, then your employer coverage will pay you $1800. And if you are paying a premium and it is taken out before taxes, that $1800 is taxable. If you pay post-tax, it is not. Since DH would be eligible for SS and he has an individual policy, the group policy is less attractive and wouldn't provide much. Do you get those statements from Social Security showing what your benefit payments would be? It's worthwhile to have an idea of that figure when planning out disability coverage. A disability does have to be rather severe and long-lasting to be covered, I think.

Second, they might not be as flexible about disability specific to the job that was performed. Some might require that after two years, the employee can be evaluated for what kind of work they can do. If they can be a greeter at Wal-Mart, the coverage can be adjusted for that expected income. In my MIL's case, she is determined to be permanently and completely disabled so she is off the hook for anything like this and will continue to get coverage until she is 65.

The employer based coverage isn't bad, it's just that you might be able to do better and have something better suited to you if you go with an individual policy.

Here is a good article about disability insurance:
http://www.fool.com/news/commentary/200 ... 0401sm.htm

A few other things I thought of....just to clarify, the personal policy was sold in increments of $500 or $1000 (I think, can't remember specifics) up to a certain max level (can't remember that, sorry!).
I think it would be good to ask about inflation or cost of living adjustment. I think DH's policy has a rider for that (yet another rider). I should check on this, but I think the inflation adjustment applies when the policy is not being used -- I don't know if he were disabled, if the payments would also be adjusted. My MILs group policy does not adjust for inflation -- she will be getting the same payment for the next 8 years or so.

DH got hoodwinked into attending a dinner sponsored by a financial planning organization. Got some info out of it though. One thing mentioned was that only a few companies now offer the "own occupation" coverage -- Berkshire, Standard, and Guardian. Those are the main ones, there might be others. I think there is also coverage you can for "income protection" -- should the insured be disabled, they get payments if they can't do a job that provides a certain percent of their former income. I don't know which is better but the own occupation was sold to us as the way to go.

[DCJenn]

Let me also add for the military spouses, USAA offers a fantastic financial planning service and an added bonus, they already know all of the disability and death benefits we're eligible for in the first place. Plus they can project out income based on rank and time in service (which is commonly available) but then calculate in all of the other areas like college planning etc. And they'll reimburse you $50 bucks for the cost of your car seat. We have everything through them except our mortgage.

Jenn

PS- don't forget to make sure that you and your spouse have updated wills. JAG can do them. Actually, they're all supposed to have updated wills in their readiness checkoff lists.