People who intend to leave their estate to heirs are often concerned about tax issues. However, after years of hard work, the last thing you want is to expose your assets unnecessarily to tax authorities. Fortunately, estate planning with life insurance and annuities can help to shield some of your assets from taxation.
Below are some key ways annuities and life insurance can be used in the estate planning process. Contact the Trumbull County estate planning lawyers at The Law Offices of John C. Grundy if you have estate planning questions.
Life Insurance And Estate Planning
Life insurance protects your family, ensuring they have ample financial resources if you pass away. But many do not realize life insurance can be a critical part of your estate planning.
One of the problems with passing an estate to your heirs is it may be exposed to taxes and expenses, including:
- Estate taxes
- Probate
- Business ownership
- Federal taxes
- Estate equalization
- Final expenses
Life insurance can help your heirs pay many final expense costs. It also can offer funds for various financial obligations, so they do not need to drain assets. In addition, life insurance is usually not subject to state or federal taxes.
If you have an estate that is more than $12.06 million, you may need to pay an estate tax of 40%. There also is a possibility the estate tax rate could rise in the future. Life insurance can play a vital role in passing your estate because of the tax-free benefit.
Annuities And Estate Planning
Annuities are helpful in many ways, including funding retirement and providing monthly income. In estate planning, annuities can also manage how your heirs receive the money.
For example, some people spend money as fast as they receive it. So if you want to ensure your heirs have a monthly payment rather than a lump sum, an annuity can be an effective vehicle.
An annuity can allow your heirs to avoid taxes. For example, Roth IRA accounts may be placed into an annuity. This will free your heirs from paying income and estate taxes. In addition, payments from an annuity can be used to buy insurance for beneficiaries. This could transfer some of your wealth without taxes.
Annuities can get around probate court. If your estate enters probate, it could take months before financial matters are settled. In addition, your heirs may need to pay attorney and court fees. Avoiding probate also can prevent family members from arguing about how assets are handed out to heirs.
Contact A Trumbull County Estate Planning Lawyer Today
Whether starting your career or nearing retirement, intelligent estate planning is one of the most important things you can do. For 25 years, The Law Office of John C. Grundy has assisted families and individuals with their estate planning and related matters.
Our Trumbull County estate planning lawyers also serve Cortland, Akron, Youngstown, Niles, Warren, Kent, Newton Falls, and Aurora. Contact us today at 330-637-9030 for a free consultation on estate planning, life insurance, and annuities.