The term “estate planning” is quite intimidating to most people, and it is a common mistaken belief that only the wealthy need concern themselves with estate planning. This couldn’t be further from the truth. Without an estate plan, your assets could end up in probate court, which in some states is backed up for years. To ensure a smooth transition of your assets to your loved ones, the distribution of your assets in accordance to your wishes, and to mitigate estate taxes, estate planning is absolutely critical.
While selecting tax-efficient investments and making the most of tax-deferred accounts may help reduce your tax bill, it won’t eliminate taxes altogether. There are a few options available that do have the potential to generate income or earnings that you generally won’t have to pay federal income taxes on—including many municipal bonds, Roth IRAs, and college savings accounts.
Saving for retirement is a big job. Accounts that offer tax advantages can help and can be a key part of an overall tax strategy because they allow you to put off paying taxes. For savers, the key is to maximize the potential tax benefits of these accounts, if you and your adviser decide that attempting to defer taxes makes sense for you.
A LIRP is a life insurance strategy that functions in many ways similar of the tax-free characteristics of the Roth IRA. It
works by purchasing a cash value life insurance policy that the owner then “overfunds” for a period
of at least 10 years. The assets also grow tax-deferred in the life insurance policy and any residual benefit pays directly to a listed beneficiary tax-free.
In sum, when considering a Financial Advisor: BUYER BEWARE! I have worked side by side with some of the most successful Financial Advisors in the Industry, and I can assure you that not all of them (in fact not even most of them) have their client’s best interest in mind when making recommendations. Financial Advisors are generally paid through some form of commission, either a straight commission on a particular trade. Remember, the financial services industry is an “eat what you kill” environment. Read more to get the facts!