Topics for Discussion

Using Life Insurance to Transfer Wealth and Build your Legacy

Kris Sollenberger, Life Insurance Pro, Scottsdale

16 Oct 2017

“These days, Baby Boomers are starting the legacy phase of their life.  In that time, they will transfer roughly $30 Trillion in assets to their Gen-X and millennial heirs 

This article is for all you who have been very successful in accumulating assets.  The government is now taking 50% of your hard earned money if you’re assets are over a certain value.  As of 2017, when we die we are allowed $5.49 million of our assets to transfer to our heirs tax-free.  For the most part, anything over that number gets taxed 50%.  Yes, I said they will take half of anything over $5.49 million. A married couple can keep $10.98 million ($5.49 mil each).  As if we aren’t getting taxed enough.bu  However it’s the law, so it’s up to us to figure out ways to maximize the transfer of our assets.

These days, Baby Boomers are starting the legacy phase of their life.  In that time, they will transfer roughly $30 Trillion in assets to their Gen-X and millennial heirs. They have many options to do so.  They could go the old fashion way and just leave their money in the bank.  However, if you read my first paragraph, that isn’t the best option for them.  Playing the stock market is also another great way to use your money to grow wealth.  Again, if you have a huge portfolio, a lot of that money will get taxed and go to the government rather than your family.  Not to mention, there is uncertainty in the market.  Look, I’m big on investing in the market, but it’s not a guarantee.  People who were heavy in the market in the late 80s or in 2008 know just how finicky the market can be.  

Now let’s look at what you can do with a life insurance plan.  Life insurance benefits are generally tax-free.  The estate tax is the only time life insurance plans are exposed to taxes.   However, that can be solved very easily by either changing the owner of the policy or setting up an Irrevocable Life Insurance Trust.  An ILIT will give you more control over that policy than if you were to just change the owner.  When you are no longer the owner of your policy, you rely on someone else to pay the premiums.  With an ILIT, you are not the owner, but you are still able to maintain some control to make sure premiums are paid.  Also, if you have your kiddos as your beneficiary, then you can assign a trusted family member to be in charge.  Once it’s time to divide out your estate, that life insurance plan is not included as part of that estate, and your beneficiaries get it all tax-free!

The bottom line is you want to keep what’s yours.  You’ve worked hard all your life, and now it’s time for the whole family to reap the rewards!  Go ahead, add up the value of your home, retirement accounts, savings, and other belongings.  You may be surprised just how much it’s worth.  Don’t get hit by Uncle Sam when it’s too late.  Call today and let’s get you covered.  Cheers!


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