Why Include Life Insurance in Planning with a Family Bank Trust?
There are 2 major benefits:
1. Instant Liquidity
With a life insurance policy, one can rest assured that instant cash will be available to their loved ones upon their passing.
2. Tax-Efficient
Life insurance proceeds owned by a Family Bank Trust will ultimately pass income tax-free to beneficiaries. In addition, the money that one gifts to the trust to pay premiums may be sheltered from gift tax and will reduce one's estate for estate tax purposes. Furthermore, life insurance policy cash values grow on a tax-deferred basis and the death benefit of a Family Bank Trust-owned policy will be sheltered from estate tax.
What are the Profiles of One Who Needs a Family Bank Trust?
- Anyone - not just an “ultra-wealthy” individual - who would like to create a family legacy to benefit successive generations over a long period of time
- People who plan to leave substantial assets to grandchildren and therefore want to utilize GSTT exemptions as effectively as possible
- Those who would like to promote specific goals and values in future generations
In next blogpost, we will introduce a case study - how a family bank trust works for someone.