You've worked hard for your money. As you contemplate passing it on to the next generation, keep in mind there's someone who wants his cut – Uncle Sam. The good news is that life insurance can help.
You can pass your legacy to the next generation without your beneficiaries having to pay income tax on the money they receive. So, if you buy a policy with a $250,000 death benefit, your heirs will actually get $250,000. Sounds like a good deal, right?
Estate taxes & life insurance
If you've accumulated so much wealth that you're facing estate taxes, life insurance can help with that too. Life insurance can offset what you owe, so you can pass on all or most of your estate.
Death benefits are paid income-tax-free to your beneficiaries, but proceeds are generally considered an asset of the estate for estate tax purposes. You should consult a competent estate planner or attorney to make sure life insurance ownership is structured properly to avoid being considered an asset of the estate. Keep in mind that neither the company nor its representatives give legal or tax advice.
Learn more about taxes on your life insurance policy by talking to your insurance professional about using life insurance to maximize the amount of money you leave to your heirs.