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Follow on Google News | Berkshire Tax Resolution: All about Life Insurance Trust by Berkshire Tax ResolutionBerkshire Tax Resolution knows that one of the most popular and effective estate planning and asset protection strategies is to use a Life Insurance Trust to hold one or more policies on the life of either parent. An article by Berkshire Tax Res.
By: Berkshire Tax Resolution Berkshire Tax Resolution knows that one of the most popular and effective estate planning and asset protection strategies is to use a Life Insurance Trust to hold one or more policies on the life of either parent. An important purpose of this trust, Berkshire Tax Resolution explains, is to exclude the proceeds of a policy from estate tax. Simply put, if you own an insurance policy on your life, the proceeds are subject to estate tax, but if your total property exceeds the exemption amount ($1.3 million), 50 percent or more of the policy proceeds can be lost to estate taxes. If you have $1 million of assets and an insurance policy for $1 million, you would pay approximately $300,000 in estate taxes. The simple solution? Berkshire Tax Resolution knows the answer, and that is to create a Life Insurance Trust to own the policy. A properly drawn trust keeps the proceeds out of your estate, free of estate tax, so that the entire amounts of the proceeds are available for your family. The cash value and the proceeds are also protected from potential lawsuits and claims, when a policy is held by the trust. Berkshire Tax Resolution points out that a portion of family savings can be transferred to the trust each year and that amount can be used to fund a policy. Keep in mind that amounts invested in the policy are permitted by favorable tax laws to accumulate free of income tax. In this manner, large amounts of value can be built up over a period of years. As an example, Berkshire Tax Resolution talks of a 45-year-old client of theirs that had a good income and was saving about $50,000 per year. Berkshire Tax Resolution set up a Life Insurance Trust with a plan to transfer $20,000 per year into the trust. He achieved the following significant benefits: • All amounts transferred into the trust and plan proceeds were fully protected against potential claims and lawsuits. • Investment earnings grew and compounded without annual income taxes. • The cash value of the policy could be withdrawn or borrowed for any needs of the trust. • Plan proceeds of $5 million dollars would be available for his family—free of income and estate taxes—upon the client’s death. Berkshire Tax Resolution realizes that the Life Insurance Trust is an important foundation of any asset protection and estate plan where the value of the estate is likely to exceed the exemption amount. Proper planning in this manner can prevent a significant loss of 50 percent or more of your accumulated wealth from taxes and can protect assets from future claims. # # # Berkshire Tax Resolution would like you to be aware of the fact that the IRS has several ways to figure out which taxpayers have not filed their taxes. The IRS now teams up with certain states in what is called the Abusive Tax Avoidance Transactions, meaning the IRS is in partnership with states to combat tax avoidance. Berkshire Tax Resolution is here to settle any accounting, or tax, issues that may be facing you and/or your business. End
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