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Gain Significant Tax Advantages by Placing Your Life Insurance In-Trust.

| Jun 29, 2023 | Tax Law

Kelleher + Holland, LLC has the resources and connections to help with life insurance planning. Life insurance is a unique asset that is usually income tax-free and asset protected at death. Quite amazingly, with proper trust planning, life insurance can be totally tax-free, meaning income tax-free and estate and transfer tax-free upon death.

Unfortunately, far too many people are improperly advised on life insurance. Many people rely solely on term life insurance and fail to include permanent life insurance (i.e., whole life, universal, variable, etc.) in their life insurance portfolios. One major mistake when purchasing life insurance is reactively focusing on price as opposed to mindfully addressing planning needs. For example, term life insurance can be a very cost-effective means of addressing income replacement needs (i.e., salary replacement, mortgage payoff, the loss of a key employee or to benefit a charity, etc.). However, permanent insurance is generally more effective to address these same needs as well as secure inheritances and address estate tax planning needs should the insured live to life expectancy. So, in most circumstances, the use of both term and permanent life insurance policies provides the best solution.

Again, with proper trust planning, life insurance can provide a totally tax-free pool of monies to provide liquidity to pay estate and other transfer taxes. Such tax-exclusive liquid monies can be used to facilitate the payment of estate taxes (usually due only 9 months after death) thereby preserving other estate assets and avoiding fire sales of illiquid assets (i.e., businesses and real estate). Such life insurance planning can avoid big problems and planning disasters.

Bottom line, a properly designed portfolio of life insurance should be included in most estate plans.

Life insurance should not be viewed as an expense but rather as an investment. Kelleher + Holland’s attorneys regularly work with life insurance partners to address your needs and can help you plan for your financial future. Schedule your free consultation today! Call us at 847-3382-9195 or fill out a contact form HERE.