Tips for Family Stimulus Bill Life Insurance Trust Estate How to Legacy Planning Northern Illinois

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Creating Your Own Family Stimulus Bill

During the economic crisis of 2008 into 2009 we have heard a lot about stimulus packages and how they will jump start our economy.

I would like to revisit an old concept that has been used to ensure the economic "stimulus" for families without the intervention of the government. After all who would you rather be responsible for the financial welfare of your family, you or the government?

I started my career in financial planning in 1986. One of the first concepts I learned was the leverage available by using life insurance. For example, a person could apply for a policy, whether it be term or whole life, pay the first monthly premium, die the next day and the family would receive a much larger death benefit. Every grandparent or soon-to-be grandparent who wants to leave a legacy to their children, grandchildren, or even great grandchildren would do this if they knew their day of demise. Since most don´t know that, I have another option to consider.

Following is a concept I have presented to clients who have idle assets. These are assets that the client does not receive an income from and does not plan to do so in the future, or in the case of IRAs, using the RMD. Examples of some idle assets would be CDs or annuities. This concept requires the utilization of an estate-planning attorney, and we may consult your CPA for tax issues depending on the type of assets we use.

Suppose a 65-year-old male in general good health has annuities or IRAs totaling $150,000 earning a 4% annual interest rate. These assets would generate $6000 per year. If he died, his beneficiaries would receive the accumulated value minus taxes that may be due on the annuity proceeds. If he were to receive the interest in cash and buy a life insurance contract, thus leveraging the interest, he could buy approximately $220,000 universal life policy. Now his total death benefit to his beneficiaries is approximately $370,000 (minus taxes that may be due on the annuity).

That is a 146% increase in his estate. To make this plan truly a legacy plan he could establish a trust to be the beneficiary and establish the distribution rules for each generation. He would need the expertise of the estate planning attorney to complete this part of the plan.

For more information about this concept or questions in regard to your estate, please contact Brett Nicklaus, CFP® at Trinity Insurance & Financial Services (877) 889-2202 or visit our website at www.trinityifs.com

Securities and investment advisory services offered through SagePoint Financial, Inc., member FINRA/SIPC and a registered investment advisor. Trinity Insurance & Financial services is not affiliated with SagePoint Financial Inc., or registered as a broker-dealer or investment advisor.