Are you looking for a way to leave your loved ones a financial legacy? Structured inheritance utilizing life insurance is something to consider. It’s not something that comes up in everyday conversation, but it’s an important topic to discuss. Let’s talk about it!
What is Structured Inheritance?
Structured inheritance is a process of transferring assets from one generation to another through a variety of methods. The most common method for structured inheritance is life insurance policies. A life insurance policy can provide financial security for your family after you’re gone and also help cover related costs like estate taxes.
Why Life Insurance?
Life insurance provides several advantages when it comes to structured inheritance. Because the funds are paid out tax-free, they are not subject to income taxes or capital gains taxes. This makes them more attractive than other forms of investment such as stocks or real estate which may be subject to taxation. Also, life insurance policies are typically less expensive than traditional investments and can be used as part of an overall retirement plan. Finally, if the policyholder passes away before the end of their policy term, the death benefit can be used to pay off any remaining loans or debts incurred during their lifetime.
How Does Structured Inheritance Work?
Sometimes people cannot handle large sums of money, and parents may not want their children to receive large amounts of inheritance in a lump sum. Life insurance proceeds can be directed to a trust and kept there until children reach a specific age or until behavioral requirements are met prior to receiving an inheritance. Or a trust can dictate how much money can be distributed and how often. You don’t have to have a trust set up though it has some advantages. You could also use beneficiary assignments to accomplish similar results. You can directly assign smaller amounts of benefits to those who may not be as good with money, or spread your benefit out so each person receives a more reasonable benefit. There are also a variety of ways to the way a death benefit is paid out to a beneficiary. These include; as a lump sum, being held in an account earning interest, period certain annuity payments, life income annuity payments, or full or partial survivor annuity as a period certain or lifetime income.
Passing down wealth through structured inheritance utilizing life insurance is becoming more popular among families who want to ensure that future generations have access to financial security after they’re gone. While there are many different ways that you can structure an inheritance plan, life insurance offers several advantages including tax-free payouts and flexible payment schedules that make it easier for your heirs. So why wait? Start planning today so your loved ones can enjoy peace of mind in minutes!
Our instant-decision life insurance process allows you to quote, customize and buy life insurance in minutes. During the process, you can automatically select the beneficiaries you want to accomplish your goals. It’s just that easy!
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