Serving Clients with Estate Planning Needs

As we head toward the end of 2016 and prepare for 2017, we wonder how the estate planning environment might change. There is even some pressure to abolish the Federal Estate Tax.  Regardless of where we stand on this issue, one thing remains and that is the federal deficit. The issues are complex, however, the chances of adopting any measure that significantly cuts tax revenue is slim. So, let's assume the current $10,900,000 portable unified gift and estate tax exemption will stand unchanged.¹

How do we effectively help clients with estate planning needs? If we are to be the catalyst sharing ideas and bringing them to fruition, the process is still paramount. As we approach the end of 2016 it is more important than ever. In my work in this space I see cases sometimes fail because the correct process is ignored. You might get lucky and stumble upon an already developed case and make a product sale.  This is neither a sure or consistent entry into the market. 

Start with Fact Finding
The successful process begins with in depth fact finding. There are many great estate planning fact finders from carriers and other sources. They all have one thing in common. They guide you in asking the disturbing questions about estate reduction. They uncover client goals and dreams, for example do they want their children treated fairly or equally. Most importantly, they contribute to developing rapport with the client. Then, when you request all those private financial documents from your client or ask for a meeting with one of their other advisors, the client's answer is yes. I see more cases fail for lack of this step than for any other reason.

Learn how detailed fact finding, teamwork, and new alternatives available to insurance professionals can make a significant difference to affluent families during the largest wealth transfer period in history.  

Fill out my online form.

¹Source: https://www.irs.gov/businesses/small-businesses-self-employed/estate-tax  

For financial professional use only. Not for use with consumers.

Policy loans and withdrawals will reduce available cash values and death benefits, and may cause the policy to lapse or affect any guarantees against lapse. Additional premium payments may be required to keep the policy in force. In the event of a lapse, outstanding policy loans in excess of un-recovered cost basis will be subject to ordinary income tax. Tax laws are subject to change. 

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Income tax free distributions are achieved by withdrawing to the cost basis (premiums paid), then using policy loans.  Loans and withdrawals may generate an income tax liability, reduce available cash value, and reduce death benefit, or cause the policy to lapse.  This assumes the policy qualifies as life insurance and is not a modified endowment contract.

Both loans and withdrawals from a permanent life insurance policy may be subject to penalties and fees and, along with any accrued loan interest, will reduce the policy's account value and death benefit. Assuming a policy is not a Modified Endowment Contract (MEC), withdrawals are taxed only to the ex that they exceed the policy owner's cost basis in the policy and usually loans are free from current federal taxation. A policy loan could result in tax consequences if the policy lapses or is surrendered while a loan is outstanding. Distributions from MECs are subject to federal income tax to the extent of the gain in the policy and taxable distributions are subject to a 10% additional tax prior to age 59½, with certain exceptions.

The tax and estate planning information contained herein is general in nature, is provided for informational purposes only, and should not be construed as legal or tax advice. Partners Advantage does not provide legal or tax advice. Partners Advantage cannot guarantee that such information is accurate, complete, or timely. Laws of a particular state or laws that may be applicable to a particular situation may have an impact on the applicability, accuracy, or completeness of such information. Federal and state laws and regulations are complex and are subject to change. Changes in such laws and regulations may have a material impact on pre- and/or after-tax investment results. Partners Advantage does not assume any obligation to inform you of any subsequent changes in the tax law or other factors that could affect the information contained herein. Partners Advantage makes no warranties with regard to such information or results obtained by its use. Partners Advantage disclaims any liability arising out of your use of, or any tax position taken in reliance on, such information. Always consult an attorney or tax professional regarding your specific legal or tax situation.

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