An Effective Wealth Transfer
Previously, I ended an article saying, “If your intention is to pass assets on to your children or grandchildren, look to options other than retirement accounts, which are now ineffective for wealth transfer.” You should ask then, “What is an effective wealth transfer tool?” There are several options. In my experience, among the most effective, easiest and precise, is life insurance.
Comparing the death benefit proceeds of life insurance to other assets one may inherit, life insurance has some distinct characteristics. A life insurance policy is a contract between the owner of the policy and an insurance company. As long as the premium required to support the death benefit is paid and the policy remains in-force, the life insurance company must pay the death benefit upon the death of the insured and a satisfactory death claim. Complicated estate planning oftentimes is not needed. When beneficiaries are named as adult persons, checks can be cut directly to those specified people. Death benefit proceeds are generally not subject to income taxation. Unlike real estate or other tangible assets, death benefit proceeds are immediately liquid. Properly placed in force at the time of issue, the policy can be designed so that the death benefit paid out would be guaranteed to exceed the premium paid into the policy. For those who are inclined to want to leave a final gift to their loved ones, a charity, or combination thereof, having a life insurance contract in place ensures that gift. That is my personal favorite aspect of life insurance. Therefore, the insured person is free to spend their money as they wish knowing the life insurance policy will be there to pay out as an effective wealth transfer.
LouAnn Schulfer of Schulfer & Associates, LLC Wealth Management can be reached at (715) 343-9600 or louann.schulfer@lpl.com TheWealthInformationLady.com SchulferAndAssociates.com
This material contains only general descriptions and is not a solicitation to sell any insurance product or security, nor is it intended as any financial or tax advice. For information about specific insurance needs or situations, contact your insurance agent. This article is intended to assist in educating you about insurance generally and not to provide personal service. They may not take into account your personal characteristics such as budget, assets, risk tolerance, family situation or activities which may affect the type of insurance that would be right for you. In addition, state insurance laws and insurance underwriting rules may affect available coverage and its costs. Guarantees are based on the claims paying ability of the issuing company. If you need more information or would like personal advice you should consult an insurance professional.
Securities and advisory services offered through LPL Financial, a Registered Investment Advisor. Member FINRA/SIPC.
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