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Preserve Your Estate with Second-to-Die Life Insurance
This is good news for high-net-worth taxpayers, except a sunset provision in the law reinstates the top tax rate at 55 percent in 2011, unless Congress acts to make the estate tax repeal permanent. Although no one can predict the future of estate taxes, few people believe the tax will disappear forever. Fortunately, estate planning strategies such as second-to-die life insurance can help preserve your hard-earned money and leave your legacy intact for your heirs.¹ When a married individual dies, the unlimited marital deduction allows all the person's assets to pass directly to his or her surviving spouse without incurring federal estate taxes. When the surviving spouse dies, however, estate taxes come due on assets that exceed the applicable exemption amount ($1.5 million in 2005). Because estate taxes must be paid within nine months of the surviving spouse's death, heirs may have to sell property or liquidate other assets to come up with the necessary funds. Second-to-die, or "survivorship," life insurance can provide your heirs with ready cash to help pay estate taxes and other expenses after you and your spouse have passed away. In addition, survivorship insurance may be less expensive and easier to qualify for than traditional life insurance. Ignoring estate taxes could mean leaving a large portion of your assets to Uncle Sam. If you have amassed a sizable estate over the course of your lifetime — and you prefer to leave more of your wealth to your heirs — second-to-die life insurance may help you achieve your goal. 1) Estate planning can involve a complex web of tax rules and regulations. You should consider the counsel of an experienced estate planning professional before implementing such strategies. The cost and availability of life insurance depend on such factors as age, health, and the type and amount of insurance purchased. Before implementing a strategy involving life insurance, it would be prudent to make sure that you are insurable by having the policy approved. |
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Estate
taxes could be called an uncertain certainty. That's because tax-law changes are
slowing reducing the top estate tax from a high of 55 percent in 2001 to a low
of 45 percent in 2007, with the total elimination of estate taxes in 2010.
