Why Life Insurance Will Always Matter in Estate Planning

With or without the estate tax, it addresses several key priorities.

 Every few years, predictions emerge that the estate tax will sunset. Even if it does, that will not remove the need for life insurance in estate planning. Why? The reasons are numerous.

You can use life insurance proceeds to equalize inheritances. If sizable, illiquid assets make it difficult to leave the same amount of wealth to each heir, then the cash from a life insurance death benefit may financially compensate.

You can plan for a life insurance payout to replace assets gifted to charity. You often see this move in the planning of charitable remainder trusts (CRTs). People use CRTs to accomplish three objectives. One, they can remove an asset from their taxable estate by placing it into the CRT. Two, they can derive a retirement income stream from the trust’s invested assets. Three, upon their death, they can donate a percentage of the assets left in the CRT to charities or non-profit organizations.1

When a CRT is fashioned, an irrevocable life insurance trust (ILIT) is often created to complement it. The life insurance trust can be funded with income from the invested assets in the CRT and tax savings realized at the CRT’s creation. (The trustor can take an immediate charitable income tax deduction in the year that an appreciated asset is transferred into the CRT.) Basically, the value of the life insurance death benefit makes up for the loss of the CRT assets bound for charity.1

Life insurance can help business owners with succession. It can fund buy-sell agreements to help facilitate a transfer of ownership, regardless of how an owner or co-owner leaves a company. It can also insure key employees – the policy can help the business attract and retain first-rate managers and creatives, and its death benefit could help lessen financial hardship if the employee unexpectedly passes away.2

Life insurance products can also figure into executive benefits. Indeed, corporate-owned life insurance is integral to supplemental executive retirement plans (SERPs), the varieties of which include bonus plans and non-qualified deferred compensation arrangements.3

Lastly, a life insurance policy death benefit transfers quickly to a beneficiary. The funds are paid out within weeks, even days. A beneficiary form directs the process, rather than a will – so the asset distribution occurs apart from the public scrutiny of probate. Life insurance is also a backbone of trust planning, and assets held inside a trust can be distributed directly to heirs by a trustee according to trust terms, privately and away from predators and creditors.4  

To learn more about how life insurance can benefit your estate plan, contact us today.

PFG Private Wealth Management, LLC is a registered investment adviser.  Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. This material and information are not intended to provide tax or legal advice.    Investments involve risk and, unless otherwise stated, are not guaranteed.  Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.  Insurance products and services are offered and sold through Perry Financial Group and individually licensed and appointed insurance agents.
Citations.
1 – estateplanning.com/Understanding-Charitable-Remainder-Trusts/ [3/28/16]
2 – quotacy.com/protecting-the-future-of-your-business/ [8/17/16]
3 – nationwide.com/supplemental-executive-retirement.jsp [11/9/17]
4 – forbes.com/sites/markeghrari/2017/05/30/pass-on-your-assets-wisely-how-to-choose-the-right-beneficiaries/ [5/30/17]

A Day in the Life of a Client Service Manager at PFG Private Wealth Management, LLC

I have recently stepped into the role of a Client Service Manager at PFG Private Wealth Management, LLC and thought I would share a ‘day in the life’ of a Client Services Manager at PFG Private Wealth Management, LLC.

What does your morning look like?

Lists, lists and lists. Hand-written lists. Any type of list you can think of. My life basically runs according to one big list!

I start my day by, no surprise, making a list.1 I organize and prioritize my tasks at hand by their deadline date. Now at first glance this sounds easy, but there is no way to predict the unexpected tasks that come my way throughout the day and have found it is necessary to leave time for the unexpected…’plan for the unplanned.’

I put aside a half hour every morning to meet with our Client Support Specialist, Breeana Bolton to review and compare each of our lists. Bre began her role in June and has been a wonderful addition to our Client Service Team.

What are you responsible for?

My main responsibility is ensuring that every client receives exceptional service and that we are continuing to exceed your expectations. In addition to this, I am also responsible for the marketing and the day-to-day operations of the firm. From updating our website and Facebook page to brainstorming new marketing ideas and pitching them to the rest of the firm, these tasks are my responsibility.

What is your favorite thing about working at PFG Private Wealth Management?

The atmosphere. The friendliness of the employees and clients. I can always count on laughing when I show up to work.

I can count on Bre smiling at me and asking me how my morning is going, followed by Andy walking in and saying “morning” to the entire office, normally with a Dunkin Doughnuts coffee in his hand. I will then hear a “good morning” and the top pop off a Mountain Dew can and know that Jeff is here and is most likely going to crack a joke or two to get us laughing in the morning. I can count on Bob to come in and ask me how my morning or weekend was and offer his help with anything I need.

In my interview I was told that the clients of PFG are like family. Working in my position I can attest that is true. Our clients are not just known as a name on a sheet of paper. We know our clients by who they are… their hobbies, their likes and dislikes, where they want to be in five or ten years, who their families are, etc. I enjoy meeting new people and learning about them, which is why this position is very rewarding to me.

Does PFG Private Wealth Management give back to the community?

Yes!

We have recently partnered with Meals On Wheels of Tampa to deliver meals twice a month to homebound individuals.

We are also in the works of partnering with Adopt-a-Highway to keep the streets of Tampa Bay beautiful. 

1After two cups of coffee

Contact

If there are any questions you would like for me to answer, please feel free to contact me.

Jordan Lansford

813-286-7776

jordan@pfgprivatewealth.com

PFG Private Wealth Management, LLC is a registered investment adviser.  Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. This material and information are not intended to provide tax or legal advice.    Investments involve risk and, unless otherwise stated, are not guaranteed.  Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.  Insurance products and services are offered and sold through Perry Financial Group and individually licensed and appointed insurance agents.

Should You Use 529 Plan Funds on K-12 Education?

Federal law says you can, but you may want to think twice about it.  

When President Trump signed the Tax Cuts & Jobs Act into law late in 2017, new possibilities emerged for the tax-advantaged investment vehicles known as 529 college savings plans. Funds from these accounts may now be used to pay for qualified elementary and secondary school expenses under federal law.Unfortunately, some state laws for 529 college savings plans are just catching up with federal law or treat such withdrawals differently from a tax standpoint. Hopefully, these differences will be resolved with time.2

Federal law permits you to spend up to $10,000 of 529 funds on K-12 tuition per year. Under the Tax Cuts & Jobs Act, you can use these funds to pay tuition at private and public elementary and secondary schools. If you do this, the withdrawal from your 529 plan is tax free or at least free from federal taxation.1 

The question is how the state hosting the 529 account treats the withdrawal. Some states, such as Missouri and Tennessee, quickly indicated they would allow 529 plan withdrawals for qualified K-12 education expenses and treat the withdrawals in the same fashion as the new federal law. Other states took a different approach. Louisiana’s state legislature, for instance, complemented the state’s 529 college savings plan with new K-12 education savings accounts in June.While your state’s 529 plan may allow you to withdraw funds to pay for qualified K-12 education expenses, the state and federal tax treatment of the withdrawal may differ. The distribution could be taxed at the state level, even if untaxed at the federal level. That is the case in Oregon, for example.2,4

You may or may not want to use 529 plan funds in this way. The Tax Cuts & Jobs Act basically redefined 529 savings plans as education savings accounts rather than solely college savings accounts. The added versatility is nice, but chances are, you have been saving money for a college education in a 529. Do you really want to draw down a tax-favored account capable of compounding to pay K-12 education expenses today instead of college costs tomorrow? Like an early withdrawal from a retirement account, this may be a decision that you come to regret. If you are independently wealthy or anticipate having the financial ability to cover college costs in some other way, then partly or wholly reducing your 529 plan balance might be bearable. If your household is middle class, it could simply be a bad idea.  

Of course, 529 plans are just one of the ways available to save for college. You should explore your options to build education savings. A chat with a financial professional well versed on the topic may give you some ideas.

Contact us today to start preparing for your 529 plan.

PFG Private Wealth Management, LLC is a registered investment adviser.  Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. This material and information are not intended to provide tax or legal advice.    Investments involve risk and, unless otherwise stated, are not guaranteed.  Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.  Insurance products and services are offered and sold through Perry Financial Group and individually licensed and appointed insurance agents.
Citations.
1 – cpapracticeadvisor.com/news/12416531/section-529-plans-can-now-be-used-for-private-elementary-and-high-schools [6/12/18]
2 – forbes.com/sites/megangorman/2018/03/08/navigating-the-new-529-rules-the-land-of-wealth-transfer-piggy-backs-and-donor-advised-funds/ [3/8/18]
3 – nola.com/politics/index.ssf/2018/06/new_law_creates_k-12_savings_a.html [6/14/18]
4 – oregonlive.com/business/index.ssf/2018/03/oregon_wont_allow_529_tax_brea.html [3/8/18]