Generational Wealth Transfer

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This is a story about a man named Brady ( or whatever you want to call him!).

Let’s say he is past his 80th birthday and has a few Million Dollars he wants to ensure lives beyond his grave. He has a daughter in her 50’s and grandchildren upwards of 18.

He wants to leave ample funds for his daughter but also wants to ensure most of his money goes to the next generation. He doesn’t want taxes to eat up the money for the grandchildren.

Wow! That really seems a lot to ask. Usually, wealth is transferred to the next generation through your will using things like trust funds. That has it’s own headaches in choosing trustees, fees and taxes.

What about insurance? Too old you say? Maybe Mr. Brady is, but his daughter isn’t!

What if he purchases say, $5 Million life insurance, on his daughter. He deposits a few million dollars to the policy as a paid up policy (see your advisor for specifics). Mr. Brady owns the policy while he lives. When he passes, the ownership transfers to his daughter.

During her lifetime, she draws on the principal, as a loan, and makes interest only loan payments. Alternatively, she can draw the income out of the policy and pay income tax according to the type of income distribution. Your advisor can explain that one!

When she dies, the $5 Million plus any remaining principal is transferred to the grandchildren according to Mr. Brady’s original designations and it’s all tax free!

Imagine that. Mr. Brady controlled his assets for three generations. And you thought you wouldn’t have any control beyond the grave!

Confused? Take this story to your personal financial advisor and ask him/her to explain different generational wealth transfer options.

Barry

P.S. What am I thankful for today?

I’m thankful to be on the topside of the daisies today! I’m thankful my computer worked this morning. I’m thankful God created the coffee bean!

What are you thankful for today?

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Barry Clermont