Can Life Insurance Policies Solve the Estate Tax-Retirement Conundrum?
Can Life Insurance Policies Solve the Estate Tax-Retirement Conundrum?
Many top-level company executives and business owners share a common problem when it comes to planning for estate taxes and retirement. The problem is that many of these individuals wonder how they are going to both pay the necessary estate taxes while at the same time make sure that they still have sufficient funds in their retirement accounts. What to do, what to do?
There are many different philosophies when it comes to tackling this issue, but recently some new developments in the world of life insurance are proving that they could have a lot of potential in dealing with this common problem amongst the wealthy.
Retirement
Using life insurance as a strategy to overcome this problem works because it combines the benefits of financing life insurance together with the internal build-up characteristic of life insurance, which is tax-free. In the right situation using this strategy can be very effective in addressing both issues; that is managing estate taxes and having enough left over in a retirement fund.
The Estate
For example, if a business owner were to take out a life insurance policy that carries a value of $10 million and then he were to borrow about $200,000 each year for the next ten years, he would pay interest of about $25,000 a year. The loan is then completely paid off in the tenth year, which means the business owner will then have tax-free income for the next 20 years of close to $500,000 per year. That’s not all. His heirs will receive almost $12 million from the life insurance policy.
Of course, this kind of strategy has to be used correctly, which means you might want to meet with the professional tax planning experts at GROCO for help.
We hope you found this article helpful. If you have questions or need expert tax or family office advice that’s refreshingly objective (we never sell investments), please contact us or visit our Family office page or our website at www.GROCO.com. Unfortunately, we no longer give advice to other tax professionals gratis.
To receive our free newsletter, contact us here.
Subscribe our YouTube Channel for more updates.
Alan Olsen, is the Host of the American Dreams Show and the Managing Partner of GROCO.com. GROCO is a premier family office and tax advisory firm located in the San Francisco Bay area serving clients all over the world.
Alan L. Olsen, CPA, Wikipedia Bio
GROCO.com is a proud sponsor of The American Dreams Show.
The American Dreams show was the brainchild of Alan Olsen, CPA, MBA. It was originally created to fill a specific need; often inexperienced entrepreneurs lacked basic information about raising capital and how to successfully start a business.
Alan sincerely wanted to respond to the many requests from aspiring entrepreneurs asking for the information and introductions they needed. But he had to find a way to help in which his venture capital clients and friends would not mind.
The American Dreams show became the solution, first as a radio show and now with YouTube videos as well. Always respectful of interview guest’s time, he’s able to give access to individuals information and inspiration previously inaccessible to the first-time entrepreneurs who need it most.
They can listen to venture capitalists and successful business people explain first-hand, how they got to where they are, how to start a company, how to overcome challenges, how they see the future evolving, opportunities, work-life balance and so much more..
American Dreams discusses many topics from some of the world’s most successful individuals about their secrets to life’s success. Topics from guest have included:
Creating purpose in life / Building a foundation for their life / Solving problems / Finding fulfillment through philanthropy and service / Becoming self-reliant / Enhancing effective leadership / Balancing family and work…
MyPaths.com (Also sponsored by GROCO) provides free access to content and world-class entrepreneurs, influencers and thought leaders’ personal success stories. To help you find your path in life to true, sustainable success & happiness. It’s mission statement:
In an increasingly complex and difficult world, we hope to help you find your personal path in life and build a strong foundation by learning how others found success and happiness. True and sustainable success and happiness are different for each one of us but possible, often despite significant challenges.
Our mission at MyPaths.com is to provide resources and firsthand accounts of how others found their paths in life, so you can do the same.
Keys to Empowering Others
A common characteristic of many good leaders is the ability to delegate responsibility. One way that this can be done is by empowering others with the ability to also lead. Empowering someone else can be an excellent tool to achieve even greater success, both for the company and the individual. So how do you…
Top Tax Tips for Business Owners
Chances are if you run your own business then you are always looking for ways to get, and stay ahead, especially when it comes to paying your taxes. They are so many different things to track and organize when it comes to business taxes, but keeping a few simple tips in mind can make…
Wealthy Californians Keep Paying More in Taxes
The tax numbers are in for the state of California and all signs point to the wealthy paying more than their fair share. With tax day now behind us it’s a key time to take a closer look into the real numbers in the Golden state, especially since income taxes account for more than…
Angel Investing: As Easy as 1-2-3
In my profession I meet with a lot of investors, mainly venture capitalists and angel investors. When meeting with many of these investors I like to learn their thought process of determining whether or not a company is worth their time and resources. Monty Kersten, Independent Board Member and Angel Investor told me the…