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Wealth transfer, as the name suggests, transfers the wealth or assets of an owner to his beneficiaries upon his passing. This is done through financial planning methods, including trusts, life insurance, estate planning, or a will – all performed with tax efficiency in mind.

Regardless of the size of your estate, wealth transfer planning makes it possible to allocate assets at a lower rate of taxation and at a higher earned interest rate throughout the life of a purchased product. This can be accomplished through a single premium life plan for anyone who is classified as middle class.

Single Premium Life Products

Single premium life products may include whole life plans, indexed life policies, or universal life offerings. Because many clients, who seek wealth transfer planning services, comprise the middle class, they do not necessarily need sophisticated estate planning services. While these clients may not be concerned about estate taxes, they should be concerned about the impact of any tax on their income.

How to Benefit from a Single Premium Policy

A single premium life product permits a policyholder, with a lump sum of cash, to contribute to the plan and pass the assets—tax-free—to his or her heirs. If you are currently between 60 and 85 years old and have set aside money for the younger members of your family, you may want to consider a single premium life plan. When considering this product, invest money that you do not currently need. This money may come from CDs, a fixed annuity, or a passbook savings account.

CDs and savings accounts are taxed and therefore reduce the amount of money you can leave your children or grandchildren. Deferred annuities, also saved for inheritance, can disrupt the income tax situation for your offspring. That is because the annuities are designed to provide income for the owner, not to facilitate a wealth transfer to children or grandchildren upon the owner’s death.

Eliminating Income Tax Worries

Because taxes are based on the heir’s tax bracket, which may higher than your own, the taxes may be substantial. For anyone who does not need to use most of his or money for living expenses and similar costs, a single premium life plan can eliminate income tax worries.

That is why this plan is considered a wealth transfer product. The plan, which often features accelerated death benefits to pay for nursing home care or home health care, is a reliable product for your own well-being as well as the financial care of the ones you love.

Wealth transfer does not end at finding an insurance plan. You can use one of the various strategies recommended by a qualified financial planner. Learn more about your financial planning options with respect to cash flow planning, asset management, retirement planning, estate, and trust planning, insurance utilization, or succession planning by contacting a financial planner.  Make the most of the money you earn and save. Learn more about your options and contact us today.