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Dianne Williams, MBA

Certified Retirement Counselor®

Since 1983 in the financial services and investment industry

 

Retirement Pathways, Inc.

4965 U.S. Highway 42, Suite 1000

Louisville, KY 40222

 

Phone:  502-797-1258 

 

Email: dianne@retirementpathways.com

Website: www.retirementpathways.com

May/June 2019

The Gift That Keeps on Giving

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While it pales in comparison to the excitement of giving and receiving smartphones and tablets as gifts, the gift of life insurance can have a much greater impact over time. From gifting an in-force policy to making annual gifts meant to pay premiums, you can have a lasting impact on the financial fortunes of loved ones through life insurance.


Gifting Premiums
Giving annual cash gifts to as many people as you want is a great way to reduce your taxable estate, and by itself it can also provide a means to provide future wealth, especially if those receiving the gifts put it toward insurance on your life that names them as beneficiaries. Note here that you can’t force the gift recipients to buy life insurance. With proper structuring and the help of qualified financial and tax professionals, your gift can help you
leave loved ones a financial legacy after you’re gone.


Irrevocable Trusts
Another way to leave estate-tax-free life insurance to loved ones is to establish an irrevocable life insurance trust, with terms saying your gifts to the trust are for life insurance premiums on your life and for the benefit of your beneficiaries. There will be a cost to establishing this trust, as well as a loss of control outside the trust’s written terms, but this gifting method can help you leave more behind.


Existing Policies
One more way you might consider leaving life insurance to loved ones is to gift an existing policy, either directly to loved ones or to an irrevocable trust for the benefit of the trust’s beneficiaries. This transfer comes full of potential tax pitfalls, which makes working with dedicated professionals essential. For example, transferring a policy whose current value exceeds the annual gift tax limit could trigger taxes. Transferring a policy that has had a loan taken against it can also cause tax complications. Also, beneficiaries may not receive the full tax benefits of the gift of life insurance — or any asset, for that matter — if the transfer occurs less than three years from the donor’s death. Talk to your insurance and tax professionals who can help you to avoid complicated surprises.


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* Securities offered through American Equity Investment Corporation. Member FINRA/SIPC. 4222 Grant Line Road, New Albany, IN 47150. Investment advisory services offered through American Capital Management, an SEC Registered Investment Advisor. Retirement Pathways, Inc. is independent of American Equity Investment Corporations and American Capital Management.

Retirement Pathways, Inc. and LTM Marketing Specialists LLC are unrelated companies. This publication was prepared for the publication’s provider by LTM Client Marketing, an unrelated third party. Articles are not written or produced by the named representative.

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