Description

Use this strategy to transfer assets to the next generation (intergenerational wealth transfer) with the following advantages:

• Assets accumulate with no annual taxation
• Control assets until time of transfer
• Assets are received by children without attribution and tax-free
• Transfer is outside of the estate/will, so assets are not subject to probate fees and estate settlement costs

Your client establishes an insurance policy with their child as the life insured. A child can be a child, grandchild, stepchild, adopted child, son or daughter-in-law. The client is the owner and appoints their child as contingent owner, assuming age of majority. At a future date, or upon client’s death, ownership is transferred to the child without taxation or income attribution. The new owner receives a policy with tax-advantaged investments that can be accessed through several options, policy withdrawals, leveraging with bank loans, or the disability benefit payout option. Alternatively, insurance can be maintained and the new owner can appoint the desired beneficiaries.

The recommended insurance plan is maximum funded Universal Life policy either increasing insurance pattern with level insurance costs or minimized insurance pattern with yearly renewable term costs to offer maximum investment opportunity.

Ideal Client
• Parent or grandparent with non-registered investments that will be inherited by the next generation
• Presently paying taxes on investment growth or there will be deemed capital gains tax at death
• Not interested in, or unable to have, insurance on their own lives
• Interested in tax-advantaged investments with reduced insurance costs based on a younger life insured

Suggested Approach
• For an elderly client who has no intention of using current investments:
  There is a way that you can invest without paying taxes, maintain control over the money as long as you wish and transfer it to your children without tax consequences.
• For a grandparent wishing to help son/daughter with needed insurance protection for family:
  We have a way in which you can help your children protect their families. You control the tax-deferred investment and decide if or when to transfer the plan.

For more information on how to personalize based on your own situation contact FSE Financial Group Broker at 403-253-7007