Content area
Full text
With current estate-tax rules set to expire at the end of next year, life insurance could help heirs to some high net worth clients avoid bigger costs and payments to Uncle Sam in the future.
Purchasing a "whole-life" or "permanent" policy rather than one that runs for a defined term carries much higher premiums — but those and other fees paid by high net worth clients for the insurance product now will go toward tax advantages for their estates' inheriting beneficiaries down the line.
As financial advisors, tax professionals and their clients try to make sense of a plethora of questions about the future guidelines looming after many provisions of the 2017 Tax Cuts and Jobs Act expire in 2026, life insurance strategies may play a critical role for wealthy estates.
Many registered investment advisory firms are "allergic to life insurance" as a concept, and it's certainly not "the wrench that fits every nut," Jack Elder, the director of advanced markets with Shakopee, Minnesota-based CBS Brokerage, said in an interview. Regardless, clients will likely hear about the potential tax-planning opportunities of buying life insurance from friends, acquaintances or the inevitable sales agent. And locking in the tax rewards now can bring some relief as life-insurance planning frequently comes up in policy proposals aimed at raising the duties paid by wealthy households by closing the loopholes in the code.
"Your clients are going to be approached, so the conversation should start with you," Elder said. "Somebody's going to talk to them about life insurance, so it should come from you."
READ MORE: With Congress slow to act, financial advisors plan ahead on estate...