Do you think about this? I do ... what will Uncle Sam take from my children's inheritance? How much of my legacy will be lost to taxes? Do you really want your heirs to lose the money that you have set aside for them? No, of course not but have you spent a couple of hours to plan a strategy for helping them keep more of what you leave behind?
Here are two quick ideas to help you plan for giving ALL of your legacy to your heirs. These are just a starting point, you need to speak to your insurance professional to personalize them and see if they will work for you.
First, if you have a lump sum of money that you want to leave to your grandchildren or you kids, lets say you have $10,000 in the bank that you got from the sale of your Great Aunt's home when she passed away. You figure that you will hold on to it in case you need it but once you are gone you want the Grand kids (let's say you have two) to get enough to buy a car or put down on a small home. $5,000 is not a bad amount ... and you are not risking it in the stock market so you leave it in the bank and put in your will that they get it when you are gone. But when you pass away they will have to what for the probate process to be completed. Then if there are no other liens on the estate they will at least be charged income tax (about 25%) and Indiana inheritance tax (5%). This means they will both get about $3,500 after those taxes are satisfied.
Okay let's change one part of this example, let's say that you buy a single premium life insurance policy with the $10,000, this will buy your heirs about $19,444 (assuming you don't use tobacco are age 65, female and in pretty good health) in death benefit when you pass away. Which means that each grandchild will get $9,722 with no income tax or Indiana inheritance tax and they will get their money right away regardless of thee probate process or any additional liens on the estate. So your two grand kids will get over 2 & 1/2 times the money.
Now, the second example is if you have 100 acres that you are leaving to your 3 children. Let's say the fair market value of that 100 acres is $7,500 an acre ... you see where I'm going with this right? You add the value of the land the value of the home the other assets and soon your children have a pretty big tax bill.
If you spend a few hours with your insurance professional you will know what that tax figure will look like and you can take out a life insurance policy that will give your children the funds they need to pay the tax bill without having to sell off pieces of the family farm at a time when they are morning the loss of a parent.
Every one's situation is different but by planning ahead you can leave even more for your heirs and really reduce the tax burden that they will face in the wake of your passing. One note though ... the earlier in life that you start the process the less it will cost you, both of these options require you to be insurable and under the age of 80.
Here are some online calculators to help you figure out what you will need to pass on all you have worked so hard to get.
http://www.infarmbureau.com/website/general/resourcesTools.aspx
J
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