The following article by Dick Reynolds of Great Plains Life and Annuity, presents a creative option for Estate Tax planning. You may find it interesting.
There are a couple of consistent reasons why wealthy individuals or married couples do not purchase life insurance for future estate taxes.
One, they may gift away many of their assets over a period of time reducing their taxable estate and two, they don’t know if they will need as much life insurance for these taxes when they do die.
So, consider this example of a “Peel Off” option, which gives them control over the policies they purchase today.
A Husband and Wife, both age 62, need roughly $10 million of survivorship life based on future growth of their current assets and using the 2014 lifetime exclusion totaling $10,680,000.
They purchase two (2) Survivorship life policies for $5 million apiece instead of just one for $10 million.
Since each has a guaranteed surrender value in year 15 equal to all the premiums paid, they now have options not seen before-
- Peel Off one of the $5 million policies via a surrender if they don’t need this much coverage anymore
- Surrender value can be retained as cash
- Surrender value can be used to pay future premiums on the other $5 million policy
- Surrender value can be dumped into the other $5 million policy with no further premiums
- Surrender both policies if the estate taxes are no longer an issue and receive back all premiums paid for the first 15 years
*Keep in mind that this Peel Off option isn’t just for estate tax planning needs. Any personal or business sale of permanent life insurance will work where the client can see the benefit of having these type options in the future.
If you have questions or a case to quote, please contact me.
Ron Boyer Boyer Insurance Services 12121 Wilshire Blvd, #600 Los Angeles, Ca 90025 O- 310-440-0281 Fax—310-440-0381 ronboyer@boyerinsurance.com