By Raymond Nash
Tax Season
Planning in an Ever-Changing Tax Environment
During the month of April, we turn our attention to taxes. In an ever-changing tax environment, it’s important to routinely look for opportunities within a financial portfolio to implement any income or estate tax saving strategies that are available to individuals and corporations.
Due to a unique combination of tax advantages on both the accumulation and distribution of funds within it, cash value life insurance can be a powerful way to reduce income taxes over the long-term. In addition, unlike some alternative retirement vehicles, life insurance benefits can be structured to pass to heirs without being subject to income or estate taxes. This feature can be attractive to high-net-worth and high-income taxpayers who have assets likely to exceed their lifetime needs. Read more about using Life Insurance in a Changing Tax Environment. This link includes a comparison of common planning techniques for future income needs for individuals.
Another benefit of the cash value in a permanent life insurance policy is the ability to implement a Non-Qualified Deferred Compensation Plan. When these policies are owned by a corporation (COLI), the policies offer tax-deferred cash value growth, tax-free death benefit, and tax-advantaged access to cash value to an employer. At the payment triggering event, the employee receives the benefit payment, which is generally tax-deductible to the employer (albeit taxable to the employee).
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.