Given that this is Thanksgiving Day week, we wanted to share with you a story of gratitude, family, and love. During this holiday season, perhaps you have been thinking about ways to show your love to your family and what will you leave behind as your legacy.
What if there was a way to leave the people you loved a lifelong message? A gift that paid out tax-free dollars to not just your spouse, but to your children or grandchildren and even beyond? A benefit that could go on to remind your kids how much you cared, years or even decades after you had passed?
The following is a story that we hope inspires you…
When Lorraine’s mother passed away during the summer of 2009, she wasn’t expecting there to be anything in the way of an inheritance. Her father worked for a telephone company in Anaheim, California, and growing up they lived frugally, took their vacations at campgrounds, clipped coupons, and bought used cars.
As his widow, her mother had enjoyed a comfortable retirement – the house was paid off and she had no debt – and she also decided she finally deserved a new car!
When the estate settled, Lorraine was stunned to find that in addition to taking care of her mother, the estate also paid each of her three siblings a gift of $350,000. “I just sat there in the office and cried,” said Lorraine. “My dad had set it up. He never was very expressive or affectionate, it just wasn’t how he was raised, but he was good with money. This gift was his way of telling us we were loved.”
This tax-free gift came along for Lorraine and her family after the financial crash of 2008. “It saved us,” recalls Lorraine. “And I wanted to leave the same kind of gift for my kids, only I never imagined there was any way we could afford it.”
But there was a way.
There is a way to build a bigger legacy without having to spend a single dime more than you are already spending. In fact, in some cases, the taxes benefits of this strategy could even save you money.
Not everyone will qualify, and this strategy might not work for your situation, but if we can’t think of anyone who wouldn’t benefit from at least looking into it.
There is more than one way to leverage a legacy. This particular strategy is ideal for people who have a Required Minimum Distribution (RMD) they have to take out of their IRA, and they don’t really need the money for income. Instead of putting this money into a lazy, low-earning bank account or a CD, you use it to fund a strategy. The advantages are threefold:
- More money for your heirs
- Less money in taxes owed by your estate
- Less money spent in income taxes paid
The steps are also threefold.
✔ First, we determine the size of the payment we’d need to generate from the IRA to satisfy your RMD, pay off the taxes owed, and establish the strategy. Some or all of your IRA income will be taxable – this is unavoidable – but by using this strategy, we can set aside sufficient funds to cover the tax debt so it doesn’t come out of your pocket.
✔Second, we shop around among the highest quality companies to find one that pays out the payment you need. Even if your IRA is already set up in an annuity, we might be able to do a tax-free rollover of your funds to get you a higher monthly payment amount.
✔Third, we set up the payments to keep the legacy they fund out of your estate to avoid the taxes. This makes your beneficiaries the owners of the asset so that when the policy eventually pays off, the proceeds are free from estate and income taxes.
This is a strategy that uses more than one investment vehicle, so it’s not something you’re going to see offered anywhere else. It isn’t dependent on a hot new product, company, or special deal, but rather it’s a strategy that can work with whatever dollar amount you have, to create more and higher dollar amounts for the future of your beneficiaries.
If you’ve always wondered if you could be doing more with the money you have to create a long lasting legacy for the people you love, then you owe it to yourself to find out if you qualify. The cost to find out is nothing. It’s free to reach out to us. We look forward to hearing your story and to find out if this legacy building strategy can work for you.