On May 1, 2021, Lawrence Mandelker was quoted in InsuranceNewsNet on utilizing estate planning to maximize the benefits of a life insurance policy.
“Sometimes people don’t realize that they need estate planning done, so they’ll contact a life insurance agent and say, ‘I need a life insurance policy,’” Mandelker said. “And the insurance agent will say, ‘Have you decided how you’re holding this policy?’”
The answer has implications not just for taxes, the most obvious impact, but also for the very health of clients’ beneficiaries. Is it enough to have a $10 million policy and name a child as the beneficiary? Legally, yes. Some people even think that is all estate planning requires. But do people want a 10-year-old to get $10 million? Probably not. How about a 19-year-old? As an adult, they can get the full amount.
“Do I want my 19-year-old sophomore in college to receive a $10 million check tomorrow?” Mandelker asked. “What’s that going to do to his ability to concentrate in school? What’s that going to do to his feeling that he needs to work hard? Is that going to change his lifestyle? Is he going to think, ‘Oh, I don’t need to work. I’ve got $10 million.’”
“There are many reasons why someone may want to invest in a life insurance policy. They may view it as a diversified investment or as a way to replace lifetime earnings and ensure that certain expenses, such as the mortgage, college or estate taxes, are paid for in the event of an untimely death,” Mandelker added. “Once you’ve made the decision that it’s a good use of your assets, then the next logical step is to make sure you get the most benefit out of it. You want to work with your advisors to reduce taxes and other expenses that affect the death benefit ultimately received and to make sure the proceeds of the insurance are paid in the way most helpful or appropriate for your beneficiaries.”
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