New Wealth Transfer Strategies to Efficiently and Effectively Pass Assets to Your Family and Charities.
Maybe you're wanting to help your elderly parents make sure they have good plans in place to make sure that their estate is passed on effectively with as little probate and tax interference as possible. Or possibly you have some funds set aside that you would like to pass along to your children, church, alumni or favorite charity and just don't know the best way.
There are so many people these days, with the baby boomer generation retiring and their parents leaving behind assets, that just don't normally plan efficiently and think that by simply having a will, they should be all set. This simply isn't usually true. Yes, your assets can and will pass with a last will and testament, however, there are other better ways of transferring such wealth.
Many seniors are very risk averse and therefore tend to hold monies set aside in CD's, money market funds and savings accounts so whatever is not used for their normal budgets, medical expenses and other healthcare costs, will go to the family. There are many tax-efficient ways of planning for this. First of all, please understand that by simply having a will only directs the clerk of court where you wish certain assets to go, among other things. This also means that all of your affairs will be made available to the public as well. If you were to set up a revocable living trust, this would alleviate this burden on your family of spending up to 6-9 months dealing with the probate office and having unnecessary taxes and fees on your estate.
If you are looking for safe, conservative ways to set aside some funds for whatever reason, but want to make sure you don't lose control and may need emergency access to, there are now fantastic wealth transfer insurance policies available for this exact reason. There are many benefits of using this strategy if you qualify for them. Some of our clients have utilized these to set aside funds that they don't plan on needing for the next couple of years and they can grow tax-deferred, are guaranteed never to lose value, and can be passed to the assigned beneficiaries potentially tax-free! On top of these benefits, the beneficiaries will likely receive a much greater amount than what you have set aside likely in a CD, Money Market, etc.
As a hypothetical case study, an average 75 year old woman, who's a widow, set aside $40,000 to go to her two daughters after she passed. Since these funds were sitting in a money market fund, they would be forced to go through probate and the daughters could likely receive less than planned. By utilizing a wealth transfer policy, she was able to guarantee her daughters a minimum of $56,000 completely tax-free and also avoid probate since it was a death benefit. If the market performed well prior to her passing, this amount is likely to continue to increase. If she were to develop an illness that required these emergency funds, after two years (in some cases sooner), she could access funds tax-free and without surrender charges.
These policies are considered a single premium, indexed universal life policy, so they are guaranteed not to lose value from the insurance company, but can participate in an indexed strategy with the S&P 500 index. Most companies that we deal with will issue these policies up to age 85. These can be great ways to set aside funds to the next generation, your church, or other qualified charities.
There are no medical exams to qualify and they are considered simplified issue, which means that with most carriers, the client answers a health questionnaire, application and possibly does a telephone interview to see if they qualify, then the policy is potentially issued within several business days.
If this is something you would be interested in or would like more information on implementing for yourself or possibly a parent, feel free to visit or Contact Us page and we would be happy to help you with further information for your situation or run some numbers for you.
