22 Jul 5 Mistakes to Avoid in Connection With Your Life Insurance Policy or Policies
5 Mistakes to Avoid in Connection With Your Life Insurance Policy or Policies
Life insurance represents a fantastic tool for most people to utilize in planning their estates. It’s very helpful in tax planning because it offers a way to leverage your money to pay anticipated estate tax liability. This enables your family to inherit money that would otherwise go to the United States Treasury. Life insurance also offers a solution for people that earn a certain amount, which depends on income and tax filing status, that no longer quality for traditional and Roth IRAs. Click here for more information. These types of policies often used as an investment vehicle and are structured to enable the owner to borrow against the policy’s cash value without incurring tax liability or early withdrawal penalties, both of which apply to IRAs. An often overlooked benefit to investing in a life insurance policy is that it passes to your designated beneficiaries outside of probate, and those proceeds are shielded from your beneficiaries creditors. Three pieces of information are critical in order to determine how policies are taxed and whether they are included in a person’s estate upon death:
- 1. Who is the owner of the policy?
- 2. Who is the insured?
- 3. Who is the beneficiary or who are the beneficiaries?
The implications of these issues are beyond the scope of this article. However, below, you will find a link to an article that highlights a few mistakes to avoid in connection with your life insurance policy. Some are common sense but worth mentioning.
Barry E. Haimo, Esq.
Strategic Planning With Purpose
YOU ARE NOT OUR CLIENT UNLESS WE EXECUTE A WRITTEN AGREEMENT TO THAT EFFECT. MOREOVER, THE INFORMATION CONTAINED HEREIN IS INTENDED FOR INFORMATIONAL PURPOSES ONLY. EACH SITUATION IS HIGHLY FACT SPECIFIC AND EXCEPTIONS OFTEN EXIST TO GENERAL RULES. DO NOT RELY ON THIS INFORMATION, AS A CONSULTATION TO UNDERSTAND THE FACTS AND THE CLIENT’S NEEDS AND GOALS IS NECESSARY. ULTIMATELY WE MUST BE RETAINED TO PROVIDE LEGAL ADVICE AND REPRESENTATION. THIS INFORMATION IS PROVIDED AS A COURTESY AND, ACCORDINGLY, DOES NOT CONSTITUTE LEGAL ADVICE.