Planning Your Legacy

Protecting Your Children

Most life insurance is not structured to benefit the insured.  It’s implemented to benefit those who are left behind when the insured passes away.  Leaving behind a significant death benefit can ease some of the difficulties of navigating a myriad of decisions, hurdles, and obstacles after an unexpected death.  Whether benefiting your family, business, or favorite charity, the influx of funds at a difficult time can build a strong foundation for years to come.

A family's legacy is built through careful planning for every generation. Federal estate taxes can take up to 40% of wealth away from a family at each inheritance, in addition to any applicable state estate/inheritance tax.  Without a plan to pay these taxes, an ultra-affluent family's funds can be depleted in just a few generations. For well-qualified individuals, life insurance converts discounted dollars (by way of premium payments) into a large death benefit.  This death benefit can be used to pay for the estate tax, so heirs can invest their inheritance in endeavors to enhance their lives and the lives of generations to come.

Using a life insurance death benefit to pay taxes and leave a sizable inheritance to heirs can enhance a family’s legacy, but only if the heirs are equipped to use the money wisely.  Ultra-affluent individuals should introduce their advisory team to their heirs prior to their death.  Discussions about financial and estate planning should take place before the life insurance death benefit is received, so a plan is in place for the optimal use of the funds.  Discussions around the tax advantages of the death benefit, structure of the trust that owns the policy (if applicable), and the intended direction for the proceeds can be passed to heirs, along with an introduction to a team of advisors for guidance.  Ultimately, it’s up to the heirs to determine who they want on their advisory team, but establishing these relationships early can be beneficial to all parties.

Contact us with any questions or opportunities to help you or your clients achieve identified goals.  This is what we enjoy doing for only a select number of families, businesses, and charitable institutions each year, and we look forward to hearing from you.