This technique is simply designed to use life insurance as an asset creator when no Federal Estate Tax is due.
In some circumstances, the annual premium outlay may be a small percentage of total life insurance coverage. Annual premiums are paid by liquidating the asset and using annual gifts. Any premium paid in excess of the annual exclusion may result in a gift tax. The technique assumes that the insured is the owner of the newly-created life insurance asset.
The technique is designed to structure the life insurance to keep the death proceeds out of both spouses’ estates via a life insurance trust. The client creates a new asset (life insurance) that provides the cash at the exact time needed to help fund the enhanced family legacy.
Note that this technique does not reflect an actual life insurance product offered by an insurance company. The client must consult the actual illustration for details, assumptions and disclosures regarding premiums and values which are contractually guaranteed by any proposed life insurance policy. Underwriting is not guaranteed.
Click the Edit button to set the specifications of the Family Legacy Using Life Insurance:
- The name of the Family Legacy
- To select the asset to use to fund this technique, click the ‘+’ button.
- Verify the amount listed as Principal
- Enter the transfer year
- Death Benefit of New Policy Enter the death benefit of the new policy.
- Annual Premium Amount Enter the annual premium amount