ITA Quarterly Newsletter • February 2019 Iowa Mortgage Association


November 2018

ITA President's Message
I look forward to serving the Iowa Trust Association as president in 2019. I want to thank Jon Holthe for his leadership of the Association in 2018. We also want to thank Darcy Burnett and the board for their help in coordinating the activities of Iowa Trust Association. As we look forward to the 2019 year we expect more market volatility. I know our industry will spend more time corresponding with clients to update client suitability and reaffirming long term investment goals. 

We thank you for your membership and you continued contributions to the Iowa Trust Association. If you have question please feel free to email either Darcy Burnett or a board member.

Brad VanHeuvelen
Sr. WMG Officer, Peoples Bank and President of the Iowa Trust Association

Schools of Banking Trust Schools
Mark your calendar for the Schools of Banking Trust Schools. Sponsored by the ITA, the programs are a tremendous training opportunity for your trust staff.
School of Trust & Financial Services
August 19-23, 2019 • Omaha
This school provides a broad trust instruction program appropriate for new trust department personnel and includes information on administration, investments, fiduciary income taxes, retirement planning, compliance, trust accounting, estate planning and more.
Advanced Trust School
August 20-22, 2019 • Omaha
This school is for trust professionals with more experience in the trust industry and graduates of the School of Trust and Financial Services. It covers crisis management, relationship management, unique assets, estate planning techniques, opening and closing accounts, and much more.
For more information about the Schools of Banking Trust Schools see the website for
registration information.


Estate Tax Law Changes Mean More Work (and Liability) for TOLI Trustees
John Barkhurst, ITM TwentyFirst
The biggest news in the trust world in 2018 had to be the changes in the estate tax laws, which were brought about by the Tax Cuts and Jobs Act.  The law raised the federal estate tax exemption dramatically and lowered the number of estates subject to the federal estate tax to less than one in every 1,000 estates1.

This will mean more work for a TOLI trustee who, besides managing a policy, may now have to justify its value to a grantor who feels it is no longer needed. A savvy trustee will explain to the client that the estate tax law changes have made the policy in the trust more – not less – valuable. If the grantor no longer needs the policy to pay estate taxes, that means more of the benefit is going to the beneficiaries – and wasn’t that the goal in the first place?

Some grantors will still want to make changes – perhaps lower the death benefit or limit the gifting that will occur going forward. This means more remediation services will be required, and having a life insurance expert on staff will be a necessity going forward.

The policy change requests over the next few years will not only bring you more work but more liability also. There are two areas that seem to generate the most liability for trustees.

Policy replacements:
Some agents are using the changes in the estate tax as a marketing tool to engage grantors and to recommend a change to the policy in their trust. The sale of new permanent life insurance in the estate planning market has dropped, and agents in that market have redirected efforts to replace existing policies. Over the last two years, we have seen an increase in “bad” replacement efforts we have caught. One prospect brought us a case for review two years after the fact, and since it was too late for us to reverse the transaction, he wound up writing a high five-figure check to make the client whole. That prospect is now a client.   

Policy surrender without review: Too often trustees, after a grantor request, simply surrender the life insurance policy in the trust without any analysis of other options. While surrender may be the first consideration, it is rarely the best choice, and other alternatives, such as lowering the death benefit, could provide a much greater benefit to the trust. The option of selling the policy in the secondary market has garnered a lot of interest in financial publications. It can provide the trust with much more than thecash surrender value, and the Tax Cuts and Jobs Act created greater tax advantages for the policy seller. A pending law, just introduced in Congress (HR Bill 7203), would allow a tax-free sale for a policy owner who uses the money to pay for long-term care (LTC) expenses, including LTC policy premiums.

In today’s changing world, a trustee still needs to remember their duty is to maximize the value of the policy for the beneficiary – anything less opens you up to possible litigation.

1.    Only 1,700 Estates Would Owe Estate Tax in 2018 Under the TCJA, Howard Gleckman, Tax Policy Center, December 6, 2017, https://www.taxpolicycenter.org/taxvox/only-1700-estates-would-owe-estate-tax-2018-under-tcja

New Year! Time to Get it Together!
Marcie Droll-Durian
As we venture into the new year, many of us have big goals! You know the usual...I am going to work out, lose weight, get 9 hours of sleep every night, eat clean, have a date night with my spouse every week, and so forth! Some folks follow through with their new year goals, but many don’t, as life gets so busy and we often over commit ourselves. As I have spent a good portion of the Winter thus far working with caregivers and helping them with their loved ones with life transitions, the common denominator with so many was the organization of important information regarding the loved ones that they are caring for. Caregivers are so busy caregiving, that it is often put on the back burner the task of gathering important documents, and all information that will become pertinent if you have an emergent situation or if you are just looking to transition them to a Senior Living Community. Often times, a checklist is helpful in gathering this information so it does not feel so overwhelming. Consider the following as a good place to start with things to gather or take care of.
  • Name (Full, maiden,any prior names from previous marriages) Date of Birth
  • Social Security Number
  • Birth/Marriage Certificates
  • Veteran D/C papers (this can be used when applying for VA benefits)
  • Lock Box Location and key location
  • Attorney name and location of Will, Living Will, Power of Attorney Papers, (Financial and Healthcare), Bank information (may have multiple banks), is there someone authorized to sign checks or obtain information if the person is unable to?
  • Investments, Savings, CD’s, Money Market Accounts, and who are these with
  • Insurance Policies, who are they with, and are they currently in force (Agent name and number)
  • Health Insurance information/Pharmacy/Physicians (copies of cards)
  • LTC Insurance (if they have it? Agent name and number)
  • Debt, such as mortgage, credit cards, personal loans? These may need to be considered when planning to pay for Senior Living
  • Funeral wishes, are arrangements made and paid for, or what are their wishes?
These are the general and more important ones to start with to get organized. LivWell Seniors is a great resource in helping you with the details and guiding you to the most appropriate resources. This will make the transition so much easier if and when the time comes, especially in the case of an emergent situation. Be sure to keep all of this together and in a safe place so it is there when you need it. This does take some time and effort, but you will be so happy you took care of organizing it when you need it most! Happy 2018!
LivWell Seniors serves as a local agency providing community-based resources that are 100% free to seniors and their families. They are funded by the senior care providers that utilize their service and network of connections. For further information, contact us at 563-265-1577, or visit our website at www.livwellseniors.com.
“The gift of friendship... a willingness to listen, a pair of helping hands, a whisper from the heart. That someone cares and understands.”

Challenges of a Post-Peak World
Bradford A. Evans, CFA, Portfolio Manager, ©2019 Heartland Advisors
Fears that profit margins are about as good as they can get for domestic companies has fueled some of the recent selling pressure on Wall Street. Investors appear to be asking if the top is in on profitability, what will drive growth going forward? We have been banging that drum for a while and welcome those who are just now contemplating the threat posed by higher input costs.

But despite the concern starting to capture the attention of investors, we believe the potential for damage is still being underestimated.  That’s because margins may be reaching an inflection point at a time when corporate debt loads are hitting historic highs. As the chart below shows, the ratio of corporate debt to revenue is nearing levels last seen during the financial crisis.


If, as expected, margins begin to shrink, debt service costs that have been manageable for businesses operating at peak profitability may suddenly become onerous. The effect could be further amplified by higher borrowing costs in a rising rate environment.

We have long sought to avoid that scenario by seeking companies with strong balance sheets that are poised to see their margins grow due to internally generated improvements. These low-leverage companies, we believe, are also well positioned to reinvest in their businesses and will not have to devote precious financial resources to servicing debt in a rising rate environment.

Disclosure: Past performance does not guarantee future results.
Investing involves risk, including the potential loss of principal. There is no guarantee that a particular investment strategy will be successful. Value investments are subject to the risk that their intrinsic value may not be recognized by the broad market.


The statements and opinions expressed in this article are those of the presenter. Any discussion of investments and investment strategies represents the presenter’s views as of the date created and are subject to change without notice. The opinions expressed are for general information only and are not intended to provide specific advice or recommendations for any individual. Any forecasts may not prove to be true. Economic predictions are based on estimates and are subject to change.

CFA® is a registered trademark owned by the CFA Institute.

Definitions: Leverage: is the amount of debt used to finance a firm's assets. A firm with significantly more debt than equity is considered to be highly leveraged.
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Legislative Tool Helps you Connect with Legislators

  The Iowa Bankers Association's Legislative Action Center allows bankers to easily contact legislators electronically. Letters on key pending legislation and regulations are posted on the site and can be easily edited and/or personalized for bankers to send to their respective elected officials and regulators at 
the state and federal level.
 The Legislative Action Center is available online at www.iowabankers.com.

    Contribute to the Iowa Trust Association
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