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The Best Way to Transfer Wealth & Reduce Taxes

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The best way to transfer wealth and reduce taxes

As we move through our working years, a plan for retirement and final expenses are key issues individuals assess when it comes times to leave the workforce. There are considerations in how to save funds and transfer to loved ones while reducing liabilities such as taxes. The best way to transfer assets to a spouse, children, and favorite charities are through different tools. A lawyer can draw up a will or a trust; however these tools are used to transfer assets, protect the estate and inheritances; not to generate wealth. Permanent life insurance is the best way to create wealth or transfer wealth on a tax favorable basis.

A tool that can leave funds behind, transfer wealth on a tax-favorable basis is through a life insurance policy. A term policy can not carry a cash value and individuals may opt for one to pay final expenses, and income replacement because of an unexpected death of an income earning spouse. However, a universal, variable universal or whole life policies can provide the transfer of wealth.

There are other uses with a permanent life insurance policy such as loans, savings, or providing an income stream if you need it now versus giving it later. A policy holder can use the benefits of a life insurance policy while the policy holder is alive and leaves benefits for loved ones and charities.
• Can take a loan against the cash value in the policy.
• Generate an income stream from the cash value once they pay it up.
• Single pay policies give options in transferring wealth to charities and loved ones.
• Some policies will deliver a death benefit and the cash value combined.
• The recipient of the death benefit proceeds does not have to pay income taxes from the benefits. (must be reported to IRS however)
• Life Insurance is not probated if there is a will.
• Alternative to risky investments in the stock market.

Generate Income

What about after the working years have passed? What if you want to supplement your retirement? Maybe you want to retire early? Maybe you just want to make sure that when you pass away your wealth transfers to your loved ones without the worry of other aspects such as probating a will.

If you own a permanent life insurance policy, then these types build a cash value over time, minus the cost of insurance. Each year your insurance company should send an illustration that shows your death benefit, the cash value, and what your annual premiums are. If you want to retire early and take a distribution of the funds from your policy, the great news is, that it is an F.I.F.O. or (first in, first out) meaning your principal comes out first and interest comes out last so you won’t be taxed until you collect your money that came from interest.

Beneficiary Does Not Pay Taxes on the Funds

Life insurance does not exempt an estate from paying federal or state estate taxes and any wealth distribution. They calculate any proceeds of an estate toward the total estate, and each year those figures are subject to tax laws. However, a person can transfer cash and build wealth through life insurance, avoiding probate and income taxes to the recipient. As always, consult your certified public accountant if you have questions regarding estate taxes and laws.

Check Policy Provisions

If you are looking for a way to transfer a large sum of money upon your death, there are some policies out there that can pay out a death benefit and the cash value. Be careful, not all policies do this, and it is important to ask before you drop a large amount of money for a single pay life insurance policy. If you opt for the cash value and the death benefit, the initial investment will be a little more than if you are funding the death benefit only.

C.D. Alternative

For those of you who do not want to expose your funds to risk in the stock market, or you have exhausted your contribution limits with IRAs or 401ks, then instead of putting money in the bank where it draws little to no interest, check into the interest rates the life insurance policies are paying. A good solid company will offer a reasonable rate of return on cash inside the policy with a guaranteed interest rate when the optimal interest rate drops.

Life Insurance Can Generate Wealth and Security

There are many tools for retirement and planning for final expenses. As we move toward our golden years, it is important to reallocate investments to reflect what stage in life you are in. In our younger working days, we have the time to recoup the losses from the cycles of the stock market. As we age and seek ways to generate income in retirement, our resolve in high-risk investments quells and many need to reevaluate where funds should be allocated. Life insurance is a tool that can generate wealth, transfer wealth and have a death benefit attached. Talk to your accountant and estate attorney to find out what is best for you and your family. Consult a financial representative and find out what life insurance policies are suitable for your unique situation. A financial representative can assist you in positioning your assets based on your needs.

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drugs

7 Blockbuster Drugs Expected To Be Launched In 2020

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Pills falling out of bottle. (Image via Shutterstock)
By Shanthi Rexaline

Biotech stocks had a fairly decent run in 2019, thanks to record deal flow, several path-breaking innovation in drug research & development and the positive broader market sentiment. New molecular entity approvals totaled 48 in 2019, less than the 59 NME approvals in 2018.

The new year is expected to be risk fraught, as lawmakers are expected to step up their rhetoric on drug pricing. Even as the outlook for drug companies remains not-so-promising, some key drug approvals could still impart some momentum to the sector.

The FDA could expedite the review of some drugs, Evaluate Pharma said, citing some approvals in 2019 that came about well ahead of the scheduled PDUFA date such as Vertex Pharmaceuticals Incorporated’s (NASDAQ: VRTX) Trikafta. Trikafta, a treatment option for cystic fibrosis, was approved five months ahead of the PDUFA date.

The following are the drugs with blockbuster potential that could make their way from lab to the shelves, according to Evaluate Pharma.

Trastuzumab deruxtecan

  • Sponsor: Daiichi Sankyo Company, Limited (OTC: DSNKY) & AstraZeneca plc (NYSE: AZN)
  • Indication: Her2 positive breast cancer
  • Status: BLA accepted with priority review status in October and the PDUFA date has been fixed for second quarter of 2020

Palforzia

  • Sponsor: Aimmune Therapeutics Inc (NASDAQ: AIMT)
  • Indication: Peanut allergy
  • Status: PDUFA date of January; A FDA panel, which met in September, voted 7 to 2 that the efficacy data and 8 to 1 that the safety data in conjunction with additional safeguards are adequate to support the use of Palforzia

Ozanimod

  • Sponsor: Bristol-Myers Squibb Co (NYSE: BMY) (came into the company’s stable through its Celgene buy)
  • Indication: relapsing form of multiple sclerosis
  • Status: The FDA accepted for review the BLA in June and has set a PDUFA date of March 25

Inclisiran

  • Sponsor: Novartis AG (NYSE: NVS)(came into the company’s stable through its Medicines Company buy)
  • Indication: LDL-cholesterol lowering therapy
  • Status: NDA submitted in December for use in secondary prevention patients with atherosclerotic cardiovascular disease and familial hypercholesterolemia

Roxadustat

  • Sponsor: AstraZeneca/FibroGen Inc (NASDAQ: FGEN)
  • Indication: treating anemia associated with chronic kidney disease
  • Status: FibroGen, AstraZeneca’s partner in developing roxadustat, said it has submitted the NDA to the FDA in late December

Sacituzumab Govitecan

  • Sponsor: Immunomedics, Inc. (NASDAQ: IMMU)
  • Indication: treating metastatic triple-negative breast cancer
  • Status: After an initial snub, the company resubmitted the BLA and the FDA accepted the application for review Dec. 26, 2019, fixing a PDUFA action date of June 2

Filgotinib

  • Sponsor: Gilead Sciences, Inc. (NASDAQ: GILD) and GALAPAGOS NV/S ADR (NASDAQ: GLPG)
  • Indication: rheumatoid arthritis
  • Status: The NDA was submitted Dec. 16, 2019, with the review period expected to be expedited due to a priority review voucher submitted along with the application

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Business

Trade Chief Robert Lighthizer Says USMCA is ‘Gold Standard for Digital Trade’

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According to US trade representative Robert Lighthizer, the United States-Mexico-Canada Agreement (USMCA) will increase GDP and is a “big win for America,” as reported by Fox Business. Lighthizer said we have what is “really the absolute gold standard on digital trade and financial services.”

USMCA is expected by the Trump administration to bring back or generate 80,000 jobs that are related to the auto industry and “create as much as $30 billion of new investment in the sector.” The problems of US dairy farmers will also be reduced by the trade deal as it will provide new access to American wheat, poultry, eggs, and many others.

Fox Business reported that Lighthizer said USMCA will raise GDP by 1.2 percentage points and create over 550,000 new jobs when fully implemented. “We have the first trade agreement in a long, long time that has the support of almost every business group, almost every agriculture group, labor groups, Democrats and Republicans, so we’re really excited about where we are,” Lighthizer said.

In a December 15 report by CBS News, Lighthizer called the White House’s act of submitting a deal with House Democrats on the USMCA as “the most momentous day in trade history ever.” His statement also referred to the announcement of the first phase of a trade agreement with China.

“It was extremely momentous and indicative of where we’re going, what this president has accomplished,” he said.

The House is expected to vote on USMCA on Thursday, but the day could still change.

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401 K

Senator Rand Paul: Pay Off Your Student Loans With Your 401k

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Senator Rand Paul says you should pay for your student loans with your 401k. Paul’s new legislative proposal, the HELPER Act (Higher Education Loan Payment and Enhanced Retirement), would allow benefits like tax-free money for college, tax-free employer-sponsored plans, no cap on student loan interest deduction, and many others. Essentially, it would allow students and parents to withdraw retirement funds to settle expenses for college.

The act “would allow Americans to take out up to $5,250 from a 401(k) or IRA tax- and penalty-free each year to pay for college or make monthly student loan payments,” explained CNBC.

According to Forbes, “Paul seeks to reshape the way people save and pay for higher education, driven through tax and savings incentives.” He notes that “the current student loan interest rates can be as high as 7% for graduate students and parent borrowers.” Student loan refinancing rates, on the other hand, have dropped to below 2%.

Paul’s critics will likely note objections such as removing money from a retirement account for any purpose that is not related to retirement may not be a wise financial move; many students cannot both save for retirement and pay off student loans; and the annual amount may not be enough to help borrowers make a meaningful impact.

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