Ensuring Legacy for Children
Margaret, a real estate investor owning three homes, is concerned about the significant capital gains tax and estate fees that her children may face upon her passing. She wants to ensure that her children receive their full inheritance without needing to sell off assets to cover these expenses. Margaret doesn’t want her hard work to be diminished by taxes and is determined to prevent her kids from having to sell a home to pay the capital gains.
Broker's Advice:
The broker recommended that Margaret keep her existing whole life insurance policy in place as part of her estate planning. The broker explained that the tax-free death benefit from her life insurance policy could be used to cover estate taxes, probate fees, and capital gains taxes on assets like the family home or investments. By keeping her policy in place, Margaret could ensure that her children would not need to liquidate her real estate properties or other assets to cover the capital gains taxes.
Why the Client Followed the Guidance:
Margaret understood the long-term importance of having life insurance, even in her later years. She saw how the policy would allow her to pass on the entirety of her estate to her children without burdening them with unexpected financial obligations. The death benefit would provide her children with immediate, tax-free funds to pay for any estate-related expenses, ensuring that the family home and other assets remain intact.
Key Takeaways
Outcome:
Linda invested in segregated funds, gaining both financial growth potential and the security she wanted for her retirement savings.
Client Scenario
Margaret, 72, is a widow and has three adult children. Over her lifetime, she has built up a considerable estate, including a family home, investments, and other assets.
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