Blog Tag: Family Wealth Management
On a nationally syndicated radio program, a caller asked a financial expert the following question: “My wife and I recently retired. We are trying to decide if there’s any reason for us to keep our term life insurance after retirement. What is your recommendation?" The answer was, “No. Drop the policies. There is never a need for life insurance once you retire."
Life insurance can enjoy favorable treatment under federal tax law. When structured properly, beneficiaries can receive death proceeds 100% tax-free, even passing free of probate and federal estate taxes. Furthermore, cash values can grow tax-free within the policy, and tax-free loans can be taken against the cash values. But favorable life insurance taxation isn’t guaranteed. When policies are structured improperly there can be significant consequences.
We get it – life insurance can be confusing. With so many different coverage options, it’s often difficult to know what is right for you or fully understand the policy you’ve already purchased. In very broad terms, there are two types of life insurance contracts: 1) term insurance; and 2) permanent insurance policies, such as universal life insurance.
Figuring out what will happen to all of our assets when we die can be time consuming. As a result, many people simply avoid it altogether. Breaking news – everyone eventually passes on, we just don’t know when! It could happen today, tomorrow or decades from now. The fact is, death is certain and it’s important to prepare for it. With more than three decades of estate planning experience, I’ve seen it all. If there is one thing I’ve learned, it’s that procrastination reigns. People don’t want to deal with death, so heirs are often left with a veritable scavenger hunt, trying to sort through their loved one’s assets and figure out what he or she wanted done with it all. You don’t have to burden your heirs with such an emotional and time-consuming task. Below I’ve outlined my pragmatic list of things to do from both a financial and non-financial standpoint.
The good news is that you’ve done well financially and established a sizeable net worth. The bad news is that you now have some tough estate planning decisions to make.
High net worth families need to consider whether they should begin gifting assets to their children and grandchildren now, or retain the assets until death and then distribute. With the convergence of income and estate tax rates, parents and their advisors need to analyze numerous and competing variables when implementing a wealth transfer plan that meets their financial goals and needs.
Janet Yellen, Chair of the Board of Governors of the Federal Reserve System, announced in December 2015, that the board decided to raise rates by .25%. This made headlines across the country because rates have been 0% since December 2008. The committee expects to make gradual increases as the economy continues to improve.