What are Life Settlements?
Am I eligible?
What Options Do I Have?
Is It Right For Me?
Why Should I Consider It?
How Much Can I Make?
Are There Tax Issues?
What Is The Process?
What Should I Prepare?
What Should I Look For?
How Do I Start?
Where Can I Learn More?
Your Life Settlement Questions. Answered.
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Examples of how a Life Settlement can help you
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Saturday March 22, 2008 12:00AM | Click here to visit original article.
A must-have tool for all financial planners, CPAs and Estate Attorneys- Life Settlements.
The competitive secondary market for insurance policies has created a new tool to help estate planners with clients whose estate needs have changed. Life settlements, the act of selling unwanted insurance policies through a bidding process to 3rd party buyers, have Estate planners and tax attorneys jumping for joy.
The act of life settling should be considered if your clients meet the following requirements
- The insured's estate tax burden has decreased and thus the insured's beneficiaries no longer need liquidity to pay estate taxes
- The insured's estate size has greatly diminished
- An estate tax law change has negated the need for the policy
- General estate planning goals have changed
- The insured's beneficiaries are no longer alive
- The insured does not have the liquidity to meet premium payments anymore
Joe Schmoe, 70, a multi-millionaire who took out a $3 million policy when he was 40 years old is the perfect candidate to life settle. Joe's estate planning needs has changed dramatically since he first took out the policy 30 some odd years ago. Joe's spouse, his lone beneficiary, has just recently passed away. Joe, ever the philanthropist, wants to donate most of his estate to charity.
In order for Joe to maximize his donations, he consulted against his tax attorney and decided to sell his life insurance policy through a life settlement. By going through this transaction, Joe not only increased his liquidity by not having to pay his premiums, but he also received $1 million by selling his unwanted policy. Joe can now add this extra cash he received to his donation fund.
A question every financial planner has to ask themselves when following up with clients is: does the client have the same esate planning needs as before? If so, life settlements could be a viable tool.
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44 Year Old Female
$300,000 Term Life
$0 Surrender Value
Paid: $225,000
80 Year Old Female
$400,000 Universal Life
$0 Surrender Value
Paid: $68,000
71 Year Old Female
$500,000 Universal Life
$3,500 Surrender Value
Paid: $50,000
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