Life insurance and annuities can ensure the worry-free wealth transfer for your clients. Low-cost, no-load solutions, designed for fee-only fiduciaries, can improve outcomes by lowering internal costs and the cost of insurance. Over the next 25 years or so, as an estimated $68 trillion in assets pass from Baby Boomers to their heirs (source: Cerulli), advisors need strategies for helping current clients with legacy planning, and serving the next generation of wealth.
Leveraging low-cost, no-load VULs is a great way to transfer wealth to heirs tax free. This new generation of VULs were engineered without commissions which, in turn, lowers the cost of insurance. So more of your clients’ premiums can contribute to the face value or cash value of the policy. Either way, more of your clients’ dollars are promised to go to work for them, not an insurance company. And for shorter-term needs, tax-free distributions can be taken in the form of loans to meet more immediate needs in retirement. Learn how Resa’s financial planner advised her to use a VUL to provide for her son.
According to Cerulli, $68 trillion is slated to pass to succeeding generations from the Greatest Generation and Baby Boomers over the next three decades. In the 15-year period beginning 2031, A staggering 10 percent of total wealth in the US will change hands every five years. Creating lifetime income streams by ‘stretching’ annuity payments to beneficiaries over their lifetimes can minimize the impact of taxes on your clients’ heirs, and help you retain them as clients. These products are built to avoid probate, and ease the transition of wealth from generation to generation. Read how Olivia spread the tax burden of an inherited annuity out over years via the non-qualified stretch provision.
To simplify the planning of charitable gifts in estates, investors may simply name a charitable organization as a beneficiary on an annuity policy. That money is then easily passed, tax free, to the named 501(c)3 organization. The assets avoid probate, are non-taxable, and this can eliminate the need for costly and complex trust structures. Learn how Virginia and Stratton simplified their charitable giving with a variable annuity.