How To Pass On Wealth

November 18, 2020
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Greg Felton, CLU, ChFC, Sales Director
gfelton@nsslife.org

One of the top reasons people buy life insurance is to pass on their wealth. This can easily be accomplished by buying a life insurance policy and naming your heirs as the beneficiary.

At your demise, your heirs receive the money tax-free. Nothing could be simpler. Most people want their children to benefit from their years of hard work and savings. Older people have ac- cumulated money in case it is needed for maintenance and welfare. But once they are living the good life, their attention turns to family. So what are some of the steps a person could take to make sure their heirs end up with more money?

Here are a few simple ideas:

  1. Gifting or just plain old give them money. You can give someone up to $15,000 in 2020. If married, you and your spouse can double that amount.
  2. Another idea involves paying directly any medical or education (tuition only) bills. To meet the requirements on this, the donor must make their check out directly to the hospital or university.
  3. Loans to family members are an- other underutilized method of transfer- ring some wealth. There are rules that must be followed, so a loan agreement is necessary but using the low interest rates from the IRS (currently 1% for 20 yrs.) makes this one idea worth considering.
  4. Grantor Retained Annuity Trusts (GRATs) are another method of minimizing the estate while still reaping some benefits. These plans require a trust agreement, the services of an attorney and are a little more complicated. Still well worth investigating.
  5. A Roth conversion is another tool to help pass on wealth. In this idea, the IRA conversion to a Roth takes place and the taxes are paid. Then at death, heirs receive tax-free money from the Roth account.
We recommend that you consult with your professional tax advisor or at- torney about any of these ideas, since they can be complicated, and everyone’s personal situation is different.

The easiest idea to pass on wealth or to leave a legacy for your family is to buy life insurance. A small deposit today can insure a person for thousands of dollars. Call your local NSS representative or Joe Elliott in the Home Office for more information on these and other ideas.