Why Estate Planning And Life Insurance Still Matter
Estate planning is about more than just estate taxes. Estate plans involve a variety of non estate tax issues, making thoughtful estate planning Canada Goose Online a critical component of a comprehensive financial plan. This year American Taxpayer Relief Act (ATRA) serves as an important reminder of that fact.
ATRA set the federal estate exemption at $5 million per person ($10 million for a married couple), indexed for inflation beginning in 2012 ($5.25 million per person in 2013). An estate in excess of the exemption amount will face a 40 percent federal estate tax. In addition, under ATRA, the unused portion of a deceased spouse estate tax exemption is allowing the deceased canada goose clearance spouse executor to transfer any unused amount to the surviving spouse.
Canada Goose Parka In short, ATRA makes estate tax planning unnecessary for uk canada goose outlet many individuals and married couples. However, regardless of the size of the estate, all individuals and families should be thinking about their estate plans. And, as a part of their estate plans, they should be considering the role of permanent life insurance, both to help ensure they accomplish their objectives, and to add flexibility to address unforeseen situations. Canada Goose Parka
canada goose Life insurance can play a surprising number of important roles in an estate plan beyond providing cash canada goose coats on sale to help pay estate taxes. These include addressing an objective as simple as providing for specific individuals (children from a previous marriage or beneficiaries with special needs), to more complex objectives such as equalizing inheritances for beneficiaries of estates with assets and facilitating the transfer and preservation of a closely held business. canada goose
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canada goose deals To help illustrate the opportunities life insurance presents, consider one family needs and some of the solutions life insurance provides. Cara was married to business owner Tom for 18 years and they have three canada goose store children two sons and a daughter. They divorced eight years ago. Cara assets include a vacation home and its contents that have been in her family for generations. Last year, Cara married Sam, who was also married previously and has one son, Luke, who has special needs. canada goose deals
canadian goose jacket Second marriages. The modern family is more complicated than it has been in years past. Second marriages can create situations where providing for a spouse may conflict with leaving an inheritance to children from the previous marriage. In these circumstances, permanent life insurance can minimize that conflict by ensuring that all loved ones are taken care of as intended. canadian goose jacket
buy canada goose jacket For example, Cara is considering her estate plan and would like to leave her assets equally to her three children, cheap Canada Goose but also to provide for Sam. One of her options is to purchase a life insurance policy for herself with Sam or a trust for his benefit as the beneficiary. Her estate planning documents can then leave the vacation home and her other assets beyond the policy equally to her children or to trusts for them. This way, Sam receives the life insurance death benefit upon Cara death, and her children receive her assets. buy canada goose jacket
canada goose clearance sale Transfer and preserve a family business. For clients who own a business, life insurance can allow for the continuation of the business while providing for individual beneficiaries. For example, the insurance can provide key person coverage or cash to fund a canada goose black friday sale buy out. Where there no ready buyer for the business, insurance proceeds can provide financial security for the owner spouse and children. canada goose clearance sale
Cara ex husband Tom owns and runs a successful real estate development business that he started Canada Goose Outlet 20 years ago. Today, he remains the owner and brains behind his company. Cara and Tom daughter, Sally, started working with Tom after college and is expected to take over owning and running the business eventually. She has learned much from her dad already, and there no doubt Sally canada goose uk outlet will be successful in continuing the business eventually.
Canada Goose Jackets That said, if Tom were to die unexpectedly, his death would be financially challenging for the business and a successful transition to Sally could take some time. To prevent this, Tom should consider purchasing a life insurance policy for himself, which the business could own and also be the beneficiary. This would give the business cash upon his death to make the transition from Tom to Sally go more smoothly. Canada Goose Jackets
Equalizing inheritances. Although many clients desire to leave their children equal inheritances, it is not unusual to come up short once specific assets whether a business or a vacation home have been accounted for. Life canada goose clearance sale insurance proceeds can ensure each child receives an inheritance of equal (or appropriate) value. Be sure to coordinate the irrevocable life insurance trust (ILIT) if one is being used and other estate planning documents so that the total amount received by each beneficiary is consistent with client objectives.
Because Sally is involved in the business, Tom wants her to become its owner at his death. But at the same time, he like to leave an inheritance to his two sons as well. Like many business owners, most of Tom net worth is comprised of his business. A life insurance policy owned either by Tom or an ILIT he creates, could provide an inheritance for Canada Goose Jackets his two sons. This would enable him to pass his entire ownership in the business to Sally without disinheriting his sons.
canada goose coats Beneficiaries with special needs. Clients caring canada goose coats for children or other loved ones with special needs can Canada Goose sale use life insurance not only to ensure that resources are available for these individuals, but do so in a way that does not disqualify them from eligibility for government benefits, which usually have income and asset limits. While laws on this vary by state, generally a special needs trust funded by the proceeds of life insurance on the client can be established. canada goose coats
Cara second husband Sam expects that his son, Luke, will outlive him and wants to make sure that he is provided for at Sam death. Luke currently receives government benefits because of his disabilities. Either Sam or an ILIT could own a policy on Sam life canada goose uk black friday for Luke benefit. In either uk canada goose case, the policy beneficiary will need to be a trust (either the ILIT or a separate trust) that is designed so that it doesn disqualify Luke from government benefits.
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Canada Goose sale Estate planning needs for life insurance death benefit are typically permanent canada goose factory sale and therefore better served by a permanent life insurance policy. Most permanent life insurance has the added benefit of accruing cash value. For a personally owned policy, this cash value adds flexibility and security to the client personal financial picture, and can be a valuable source of retirement income. Canada Goose sale
canada goose store Using life insurance in an estate plan has an added income tax benefit. In 2013, clients above certain income levels could be hit with higher income tax rates, reduced personal cheap canada goose uk exemptions or itemized deductions, and a 3.8 percent net investment surtax. Permanent life insurance that grows tax deferred can help to mitigate the impact of higher income tax rates. canada goose store
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buy canada goose jacket cheap When including life insurance for an Canada Goose Outlet estate plan, the client should consider whether the policy should be owned personally or owned by an ILIT. This buy canada goose jacket decision is made by balancing the importance of the client maintaining control over and www.haydar-furniture.com access to the policy cash value and keeping the death benefit out of the client estate. buy canada goose jacket cheap
With a higher federal estate tax exemption, many clients are likely not to face estate tax at death. For these clients, they can own their estate planning life insurance personally, allowing them canadian goose jacket complete access to the policy cash, canada goose without the trade off of a higher estate tax bill. Keep in mind that clients with assets below the exemption amount still might have reasons to use ILITs. Estate tax laws could change, assets might appreciate and be subject to estate tax in the future, or using a trust might meet other non tax objectives.
Canada Goose online For clients with larger estates, who aren relying on policy cash value for their own needs, an ILIT remains an alternative that allows the life insurance death benefit to escape estate tax. Where the insurance is owned by an ILIT, the trust should be drafted with as much flexibility as possible, allowing the trustee to use the cash value for the benefit of the trust beneficiaries during the insured lifetime, thereby giving the trustee and the beneficiaries options to address future changes and opportunities. Canada Goose online
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Canada Goose Outlet Despite the passage of ATRA, advisors should still be meeting with clients to review their estate plans and reminding them that estate taxes are only one element of their estate planning. Ultimately, it about the 4 Rs: getting the right assets to the right beneficiaries at the right time and in the right way. If financial professionals overlook the opportunity to proactively address estate planning, it can mean missing important opportunities to help clients, and the generations that follow them, meet their long term financial security goals. Canada Goose Outlet
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