Life Insurance Leaves Behind a Legacy of Love - LifeQuotes.com

Life Insurance Leaves Behind a Legacy of Love

Life insurance is used as a way of leveraging assets when transferring property to younger generations. Life insurance recipients can be adult children, grandchildren and even great-grandchildren. In a matter of speaking, life insurance leaves behind a legacy of love.

Transferring assets depends on whether they are adults or minors. They may also own personal policies but even so, they can be considered beneficiaries on other policies.

McGill’s Life Insurance comments that many times, parents or grandparents pay the premiums on policies owned by their children or grandchildren with gifts that will qualify for the annual gift tax exclusion. The annual gift tax exclusion is the amount that can be given away by an individual in any given year to an unlimited number of people free from all federal gift tax consequences.

For example, in 2014 the exclusion was $14,000.

Grandchildren may be subject to the generation skipping transfer text, which is levied in addition to estate and gift tax. According to Fidelity, paying for education may be a concern as grandchildren transition into adulthood and beyond. Life insurance is a legacy of love that can provide for your future generations.

If you have not already placed assets in a 529 plan, Uniform Gifts to Minors Act (UGMA) account or Uniform Transfers to Minors Act (UTMA) account, doing so during your lifetime may be a strategic way to reduce the value of your taxable estate while working toward education savings goals. You control a 529 plan until the money is withdrawn.

For minor grandchildren, trusts can beneficial which allows you to state how you want the money to be managed. When transferring assets to an adult grandchild, you can set up different types of trusts that will help reduce estate taxes with distinct benefits. Trusts can ensure that special needs grandchildren also have the care they need during their lifetimes.

Fidelity identifies the following:

· Generation-Skipping Trusts can allow trust assets to be distributed to non-spouse beneficiaries two or more generations younger than the donor without incurring GST tax.

· Credit Shelter Trusts make full use of each spouse’s federal estate tax exclusion amount to benefit children or other beneficiaries via bypassing the surviving spouse’s estate.

· Irrevocable Life Insurance Trusts (ILITs) purchase life insurance policies to provide immediate benefits upon death that do not usually pass through probate.

Benefits of a life insurance trust will always give you maximum control over your policy, as well as provide income to your spouse, without insurance proceeds being included in your spouses estate. But always talk to a qualified insurance specialist or financial planner about the best strategy that fits your needs.

Everyone’s situation is different and poor planning could be many times the cost of expert advice. Call LifeQuotes today and find out how life insurance can leave behind your own legacy of love for your family.

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