How to Prepare for Sunset

Using Life Insurance

During the month of June, we are focusing on preparing for the sunset of the increased federal estate and gift tax exemption limit.  The Tax Cuts and Jobs Act (TCJA) of 2017 temporarily doubled the exemption through the end of 2025.  Although that seems like a distant deadline, there might be time sensitive details to address before being able to take advantage of the increased limit.

Once gifting strategies have been reviewed with an advisory team and the plan has been unveiled at a family meeting, it’s time to consider life insurance as part of the plan.  There are many ways that individuals and families use life insurance to enhance their strategy:  as a tax-free benefit, to provide income protection, to help fund retirement, to cover long-term care expenses, to help pay estate taxes, to transfer wealth to each generation, and as part of legacy planning. 

Any gifting that is completed before legislation is set to expire at the end of 2025 can be enhanced when using discounted premium dollars to pre-pay estate taxes, increase inheritance, or bolster charitable giving via a substantial death benefit.

The size of the policy (or policies) that is needed and the premium tolerance should be weighed as part of the estate planning process before the life insurance acquisition begins.   Then there are several funding strategies to consider that can help a client achieve their goals using life insurance coverage.  Detailed fact finding and questioning of the individual or family’s goals and objectives is imperative when developing the appropriate structure for the policy(ies).  It is essential to work with a knowledgeable team of advisors to develop a viable strategy. 

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.