Tax Season

Life Insurance Tax Advantages

During the month of April, we turn our attention to taxes.  While filing this year’s taxes, most people want to implement more vehicles that have tax advantages to reap those benefits when they file next year.  There are several ways in which life insurance can create tax advantages for families and businesses.

Most investments, unless they are held in an IRA or a qualified retirement plan, do not grow on a tax-deferred basis. Regardless of how they are held, many assets are subject to taxation when they are passed from one generation to the next.

Life insurance, however, holds unique, tax-favored qualities:

· Life insurance policies with a cash value component can generate tax-deferred growth.

· Life insurance death benefits are generally income tax-free to beneficiaries.

· In many cases, death proceeds can be free from estate taxes through the use of irrevocable trusts.

Moreover, Section 1035 of the Internal Revenue Code offers a tax-favored transfer strategy—policyholders have the opportunity to exchange an underperforming policy for a new one without recognizing taxable gain at the time of the exchange. This level of flexibility is simply not available with traditional asset classes.

Read more about using Life Insurance For The Ultra High Net Worth clients.  The tax and legal references attached herein are provided with the understanding that Heirmark is not engaged in rendering tax, legal, or actuarial services.  If tax, legal, or actuarial advice is required, you should consult your accountant, attorney, or actuary.  Heirmark does not replace those advisors.

Contact us with any questions or opportunities to help you or your clients achieve their 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.