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Estate Planning with Life Insurance
7 Potential Downfalls to Avoid

Nobody likes paying taxes, but how can someone reduce the inheritance taxes owed on their estate, even when they are no longer around?

Clients call us every day with questions about estate and inheritance taxes. We created this epic guide to tell you everything you need to know about estate planning with life insurance.

In this guide, we’ll tell you all the secrets the IRS doesn’t want you to know, as well as, costly mistakes to avoid when buying life insurance for estate planning. You’ll have all information you need to correctly set up your life insurance and reduce the estate tax liability that would otherwise be left behind for your loved ones to settle.

If your estate is subject to estate taxes, the IRS will come to collect from your heirs within nine months of your passing.

These estate taxes are levied against your estate’s value and are in addition to any inheritance taxes that your state may also charge.

If your family does not have the money to pay these taxes, they will be forced to sell off parts or all of your estate to settle with the IRS.

JRC Estate Planning Calculator

It's critical to know where you stand when it comes to Estate Planning. Use our custom Estate Planning Calculator to help determine your best course of action!

Assets

Assets (Cont.)

Liabilities

Calculated Estate Amount
$ 0

Net Taxable Estate
$ 5,450,000

Assets

Assets (Cont.)

Liabilities


Need assistance? Call an expert at 855-247-9555

* This calculator is for informative purposes only. JRC does not provide legal or tax advice. We always recommend speaking with an attorney or tax expert prior to purchasing life insurance.

JRC Estate Planning Calculator

Historically, investments tend to double in value every 7-10 years. So while you may not have an estate tax problem now, you may in the future. Buying your life insurance policy when you are younger will save you considerably in the future.

What is your current estimated estate worth? $0

What is your current estimated estate tax? $0

In 10 years you can expect your estate to be worth $0.

In 20 years you can expect your estate to be worth $0.

In 30 years you can expect your estate to be worth $0.

Need assistance? Call an expert at 855-247-9555

* This calculator is for informative purposes only. JRC does not provide legal or tax advice. We always recommend speaking with an attorney or tax expert prior to purchasing life insurance.

Free life insurance quotes in less than 1 minute!

How Do I Avoid Estate Taxes with Life Insurance?

Life Insurance is commonly purchased as a form of estate protection for affluent families. Americans commonly utilize life insurance to settle their estate tax liability and allow their families to keep the possessions they’ve worked their whole lives for.

Buyer Beware
The vast majority of life insurance policies that are purchased for estate planning and protection are not set up correctly. In fact, your life insurance policy may actually increase your tax liability.

Don’t fret! Estate planning with life insurance can be a breeze if you have an experienced agent. JRC will walk you through the process of correctly setting up your life insurance to reduce your estate tax exposure.

If you have already purchased life insurance and your policy is set-up incorrectly, we’ll explain your options to make sure your family does not have to sell off your prized possessions at a discount to settle with the IRS.

I needed more life insurance to protect my estate from estate taxes, and the company I was originally working with was slow and unresponsive. Jason and JRC executed a complicated strategy replacing two second-to-die policies with a single policy that provided better coverage and saved me tens of thousands of dollars per year, all on a one-time payment basis.

Stuart Howard

Estate Planning with Life Insurance
and 7 Potential Downfalls to Avoid

Over the years, JRC has helped hundreds of clients with their life insurance needs for estate protection.
Here are some of the common mistakes we see:

Mistake #1: Owning your own life insurance policy

In order to minimize your estate tax liability on your estate, you cannot be the owner of your own life insurance policy. If you own your own policy, the death proceeds become part of your taxable estate and will actually increase your estate tax burden.

Mistake #2: Outliving your life insurance policy

The most common mistake is purchasing term life insurance and outliving it. This is typically as a result of buying term life insurance for the lower cost. Universal Life (“GUL”) life insurance is often the best compromise. It works like term insurance, but the difference is you have the ability your premiums to a specific age, rather than for a specific number of years (term).

Mistake #3: Waiting too long to transfer your life insurance to an irrevocable trust

If your trust is owned by a revocable trust, you have the ability to transfer ownership of the trust to an irrevocable trust for tax advantages. However, the IRS is wise to this strategy, and has established a 3-year waiting period for changing ownership between trusts.

Mistake #4: Purchasing life insurance that builds a cash value

“Cash value” policies such as whole life, variable life, and traditional universal life combine life insurance with investment vehicles. These policies are relatively expensive and generally charge high maintenance fees. These policies combine life insurance with investment vehicles. The “cash value” is difference between the amount you’ve paid in and what’s required to cover the life insurance portion.

Mistake #5: Setting up the wrong type of trust

An alarming amount of applicants contacting JRC to buy life insurance to protect their estate tell us they have a trust established, but it’s a revocable trust. Life Insurance for estate planning must be owned by an irrevocable trust. This irrevocable trust must also be the payer of your life insurance policy.

Mistake #6: Selecting the wrong trustee for your trust

Whereas you’ll normally list family members or a charity as beneficiaries for other policies, life insurance for estate protection must have your irrevocable trust.

Mistake #7: Naming yourself as the trustee of your irrevocable trust

You cannot be the trustee of your irrevocable trust. Our clients often list a family member as the trustee; however, it’s common to assign a trust attorney or corporate trust professional as beneficiary.

How Do I Get Started?

Estate planning with life insurance can seem like a daunting task, but we’ve helped hundreds of client’s just like you with estate tax protection. We’ll explain your options to you and by shopping more than 40 top-rated life insurance companies, we’ll find the best rates available.