Inheritance? I suppose it is a practice that went back as far as people. There, unless your children are a pain, is usually a desire to leave something behind and for good or bad life insurance has been touted as a giant band aid for those of us whose lives didn’t go well enough to leave piles of gold and jewels. The flip side of that are the bumper sticker crowd who are “spending their kid’s inheritance”. We fall somewhere in the middle. My bride and I intend to enjoy ourselves to the extent we can with what we’ve earned and hopefully live comfortably, but we don’t have a master plan for a zero balance in cash assets when we meet our maker.
Seriously though, let’s talk about the idea that many people have that leaving inheritance is a duty and, even if it puts out budget in a bind, it should more than what’s just left over. We want our kids to remember the size of the check instead of how hard we worked all of those years to raise and help them. Some of us want them to remember the size of the check so they might forget about our shortcomings. Please understand that we aren’t saying it’s not OK to carry life insurance as a legacy or inheritance, just that we shouldn’t feel compelled to do it because it’s what we should do and we shouldn’t feel compelled to do it by stretching our budget to the breaking point.
We’ve heard figures about the cost of raising children and they always seem a little high, like $150-$200,000 to raise a child. If that includes paying for their college, which we also don’t consider our duty, it’s probably fairly accurate. So if you raise two or three, or only one, doesn’t it seem fair to pat yourself on the back and not feel guilty about what happens after you die. We know. Scrooge is alive and well and he is us.
On the flip side though are those people with more money than they can spend in their lifetime and often times that money is sitting somewhere generating taxable income. This is money that is already earmarked to be left to the next generation. We have a current client in that situation and as their become available to move without penalty, they are taking the tax hit and putting the cash into single premium life insurance policies. Even with some health issues this client is able to get a standard life insurance rate, and at their age 71 they can buy a paid up life insurance policy with $144,000 death benefit for a single premium of $75,000. Even though it immediately doubles the value of the premium, it’s never taxable as income again and tax free to the heirs.
Interesting topic. I think all of us hope to leave a legacy of some sort. You can do that with life insurance or you can do that by just setting the best possible example of how to live your life and if there’s anything left over after we finish ours, they can have it. If you have questions please call or email us directly. You may not agree with us, but we can help accomplish whatever you want.
There are no comments on this entry.
There are no trackbacks on this entry.