Buying Life Insurance To Shield From Estate Taxes

Life insurance is one of the most important investments that you’ll ever make for your family members. It’s one of the only ways that you can ensure that they will have the money that they need, regardless of what happens to you. If something tragic were to happen, a life insurance plan is going to give them the money that they need to get through the difficult time without struggling financially.

As Benjamin Franklin said, “in this world nothing is certain but death and taxes” and having a life insurance policy can help with both of those. The primary goal of life insurance is to give you family the money that they need to pay off any debts or final unpaid expenses that you would leave behind after your passing, it also gives them money to replace your paycheck after your death. But, there is also another useful way that you can use a life insurance plan, and that’s to protect your loved ones against massive estate taxes. 

At Longevity Brokers we are dedicated to helping the people in and around Denver, Colorado get the best insurance plans on the market. We know that shopping for insurance is never a fun experience, but we are here to make it as quick and simple as possible.

Life Insurance and Estate Planning

There is no way to avoid your passing, which means that you should always plan for the worst. It’s not a fun conversation to have, but it’s one of the most important. Not planning for your passing could leave your family with a massive amount of debts and taxes that could leave them with a mountain of bills. That will make the situation a thousand times worse. Estate taxes can quickly consume the money that you planned to leave to your loved ones. In fact, those taxes can be up to 55% of your estate. There is no way around them. Uncle Sam is going to want his money.

There are several things that you can do to make the process easier, and you should start with your life insurance and getting the most out of your policy. One way that you can do this is by setting up a life insurance trust to help shield your loved ones from large estate taxes that can quickly drain the legacy that you want to leave behind to your family members. While the process can be confusing, the idea behind the life insurance trust is quite simple. The insurance trust will own the policy for you, which means that it won’t be calculated in your assets. Since you don’t technically own the policy yourself, they won’t be able to count the plan as your personal asset.

An irrevocable insurance trust is a unique tool that is simple to set up and is the best way to cushion your loved ones against the large estate taxes they could face after your passing. Inside of the irrevocable insurance trust, there are three separate components. The first is the “grantor,” which is the person that creating the trust. The next part is the person that manages the trust, which is usually the professional company and they will handle all of the money and the inner workings of the plan. The last part is the beneficiary that is the person that is going to receive the money after you pass away.

Trust vs. Life Insurance Plan

There are several other advantages to a trust versus having a life insurance plan. The biggest one is that the trust will allow your loved ones to receive the money, even if something were to happen to the person that you named a beneficiary of the plan. If something were to happen to the beneficiary of your life insurance policy before they receive the payout, there is going to be a long and painful court process to get the money that they need. With a trust, on the other hand, the trust can use the money for the good of the family to meet their needs.

Another advantage to an irrevocable insurance trust is that it gives you control over the money that you leave to your family members. When you create the trust, you can designate the money to be used for a particular need. You can outline the money to be used to pay off any debts, estate taxes, or even just to be distributed to your children in small chucks ever year.

Life Insurance to Combat Estate Taxes

Life insurance is one of the most important purchases that you’ll ever make for your family. It will give them the resources that they need if anything tragic were to happen to you. A life insurance policy is the best safety net that you could ever give your loved ones, but it won’t protect you against estate taxes. It could give your family the money that they need to pay estate taxes, or it could cause the taxes to be much higher. Having an insurance trust to offset those taxes and ensure that your family receives the money that you left them, without Uncle Sam taking his chunk.

At Longevity Brokers, we are proud to provide quality and affordable life insurance to the Denver, Colorado area. Not only do we offer life insurance, but we also work to protect other areas of your life, including your house and your car. If you haven’t bought a life insurance policy because you think it’s too expensive, there are several ways that we can help you get lower insurance premiums.

We know that finding the perfect life insurance policy can be a long and complicated process, but we are here to make the process as quick as comfortable as possible. If you have any questions about getting life insurance up setting up a trust, please contact one of our agents today, and we will be happy to help. You can call us at (720) 209-4598, or you can use our contact page, and an agent will get in touch as soon as possible.

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