Federal tax scenarios in 2013 that could affect your Estate Planning
Monday, July 2nd, 2012
2012/2013 Gift Estate Tax changes for 2013
There are three possible federal tax scenarios that could affect your estate planning: (1) 2012 law as it currently exists; (2) 2013 law that will become effective Jan. 1, 2013 if Congress does not act, and (3) the President’s proposal to change the 2013 law.
Today, it’s not uncommon for individuals to be insured under a life insurance policy for $500,000 to $1 million in death benefits. Once you add in the value of your home, your retirement accounts, savings and other belongings, you may be surprised by the size of your estate.
If you factor in several more years of growth and the fact that the estate tax exclusion will drop to $1 million in 2013, it is clear that many of us are facing an estate tax issue. A viable solution to this is to maximize your gifting potential and to transfer policy ownership whenever possible at little or no gift-tax cost.
Estate taxes can substantially reduce the value of the inheritance you leave your family. If you have worked hard to leave a financial legacy for your loved one, then you should also have an adequate life insurance policy that will cover the estate taxes. Call Independent Insurance Consultants to make sure that your loved ones will be receiving the inheritance they deserve.
Knowing your potential estate tax liability is a great place to start – Call IIC today to find out to how to preserve your wealth for future generations.
See Example Below
Example:
Bob Smith has a net worth of 2 million after combining the following assets.
- Liquid Assets
- Real Estate Home / Investment Property
- Jewelry
- Investment Accounts – IRA, 401K , etc
- Business
Suppose Bob Smith passes away in the year of 2013. His estate would be taxed 55% by the Federal Government AND an additional 9.6% by the State of Tennessee.
Leaving his beneficiaries a total of 700,000.00 while still owing 1.3 million to the federal and state government. Why Risk approximately 65% of your estate when you can protect your loved ones inheritance by purchasing a simple life insurance policy.
If Bob Smith purchased a life insurance policy to cover the 1.3 million that would be owed in estate taxes in 2013 it would cost approximately $238 per month for a 20 year term. Changing the total inheritance from 700,000 back to 2 million.
Whether you are the estate owner, or the beneficiary of the estate – this is a wise investment to protect your assets.