The Chicago-based Spectrem Group recently reported a 16% increase in the number of American millionaire households for 2009.
If you’re in the millionaires’ club, you’ve worked hard to achieve that status. Undoubtedly, you want your loved ones’ financial needs to be met in the event of your death. You may be building a family business and intending to transfer ownership to the next generation. Estate planning now can ensure that those goals are fulfilled.
Replacing Your Income
Investing in a life insurance policy can help your family maintain their standard of living by replacing your income. Consider the cost of maintaining your home, providing an education for your children, as well as other financial obligations.
Passing on the Business
According Advisor Today, “Only about 30% of family-owned businesses survive to the next generation, and only half of those that make it to the second generation, make it to the third generation.”
Family-business owners, including farmers who are sometimes millionaires, are often asset rich but cash poor. Life insurance can supply the needed cash to allow for the intended succession of your business. Otherwise, the IRS, lawyers, or co-owners may take over your business at the expense of your intended heirs.
Paying Estate Taxes
Life insurance may also help your heirs pay estate taxes. In 2001, Congress passed a law raising exemptions on estate taxes yearly, culminating with an estate tax hiatus in 2010. However, the tax exemption disappears in 2011, and is set to return at a whopping rate of 55% with an exemption level of slightly more than $1 million.
In addition to federal taxes, many states levy estate taxes as well. In fact, 18 states recently increased their estate taxes, according to Kiplinger Personal Finance.
Planning Is the Key
There are many strategies for passing on wealth to heirs. It’s wise to seek help from a tax professional, financial planner, a professional insurance agent, or other professional estate planner, to investigate the best strategies for preserving your estate.
Whether you want to replace income or pass on your estate to your heirs, the best life insurance policy for your needs can provide the funds to carry out your estate goals.