Annuity Maximization
Do you currently own one or more annuity plans, originally bought for income purposes? But over the years, you have found you will not need these assets to produce retirement income for yourself. If you leave these assets to your heirs, they will pay income taxes (at their tax bracket) on all the accumulated tax deferred interest in the annuity. You may want to investigate if there is a better way to pass these assets to your heirs.
Solution:
You can reposition the annuity assets into a life insurance policy. You will have to pay taxes when you withdraw the money from the annuity, but it will be at your lower tax bracket and not your children’s. Even after paying the taxes, the net remaining assets will generate much more money to your children via the life insurance policy death benefit. And all the money they receive will be tax free.
Example:
John (age 70) and Mary (age 65) Client invested $75,000 in an annuity which now has a value of $100,000. If left to their children, the annuity would be worth $94,200 after taxes (assuming a combined federal and state tax bracket of 36%). As an alternative, they could cash in the annuity, pay the income taxes of $9,000 and invest the remaining $91,000 into a last to die life insurance policy on themselves. At their death, the children would now receive $364,000 - tax free. It would take the same annuity accumulating at a 5% rate thirty six years to generate that same amount of money. The life insurance plan can guarantee that amount from day one.
Contact us for a complementary, no obligation analysis of your personal situation and a proposal on how best to implement this program to maximize the value of your annuities for your heirs should it be appropriate for your estate planning needs.
