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Does your estate plan include transferring your wealth onto your family? Have you looked over potential tax implications? It\u2019s important to understand that your beneficiaries may be in for sticker shock when they receive a tax bill along with your generous gift. If you\u2019re looking for ways to keep your financial legacy away from Uncle Sam, you might consider life insurance.<\/p>\n
Tax Efficiency.<\/b> The proceeds from life insurance are free of income tax. For example, if your death benefit is $5 million, your heirs will receive the total $5 million. The only situation in which tax may be due on life insurance proceeds is when you remain exposed to the estate tax. The problem can be solved if you properly use a\u00a0life insurance trust.<\/p>\n
Market Guarantees<\/b>. Sure, investing is exciting, but it\u2019s loaded with risk.\u00a0Life insurance removes most of the risk\u00a0by offering fixed returns. If you\u2019re craving more significant upside potential, talk to your financial professional about insurance products, such as\u00a0indexed universal life,\u00a0that provide a fixed return plus the possibility of additional credits through exposure to a linked market index.<\/p>\n
Leverage<\/b>. No one can precisely calculate the return on a life insurance policy until the insured dies; however, you can know exactly what your heirs will receive. Even for those who live past life expectancy, the return \u2014 especially when factoring in the tax-free nature of it \u2014 is most likely going to beat the alternatives.<\/p>\n
Business Succession<\/b>. If you own a business, it can be tricky to leave money to your heirs since much of it is tied up in business expenses. Plus, it\u2019s natural to want your beneficiaries to receive equal amounts even if not everyone takes over the family business. To jump through these hurdles, you can use life insurance to\u00a0create liquidity\u00a0and partially fund the inheritance for any child not taking on a business role.<\/p>\n