CMS and Estate Planning
Maintain surviving family's lifestyle - by paying off debt and providing a lump sum of cash which can be drawn from in the event of death and to fund a QTIP.
Divide and distribute your estate equitably - for example, an heir can be your business that may be worth several million dollars. Life Insurance can be used to provide equal values to an heir who will not be receiving any ownership of the business.
Reduce or eliminate gift and estate taxes - for example, a member of senior generation transfers their residence to a Qualified Personal Residence Trust (QPRT), the residence eventually passes to the junior generation without any additional gift tax - as long as the grantor survives the specified retained term; junior generation purchases life insurance policy insuring senior generation to insure against the risk that the residence may be brought back into the grantor's estate if the grantor dies during the retained term. Similar programs can be set up for Grantor Retained Annuity Trusts (GRATs), Family Limited Partnerships (FLPs), Private Annuities and many others.
Solve liquidity needs - to provide capital to purchase assets from the taxable estate, which in turn can be used to pay for administrative costs, gift and estate taxes. Often times estates are comprised of non-liquid property or property such as collectible artwork, jewelry and other family heirlooms that heirs may not wish to sell to pay expenses. Life insurance can be used to provide the necessary liquidity to pay the expenses associated with handling the estate.
The above examples are only the tip of the iceberg. There are many more ways in which life insurance can be used to solve issues associated with estate and gift taxes. Contact us to learn more.
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