Insuring an Estate Tax Liability in Virginia

Life insuranceMany successful business owners and senior executives face the seemingly opposing needs to pay estate taxes and simultaneously ensure that adequate funds are available in retirement. Could life insurance policies offer a solution?

If you are a person of considerable means and want to avoid estate tax at your death, then this important issue that you should deal with now. Alternatively, you stand to lose so much of what you have worked so hard to achieve. As those in business well know, there are really only two ways to deal with a potential business liability: proper planning and execution on the one hand, and proper use of insurance on the other. Many find both approaches can also work in tandem to effectively achieve their estate planning and retirement goals.

The use of insurance to deal with an estate tax liability inevitably brings us to the topic of life insurance. In fact, an interesting approach was advocated recently in a Forbes article titled “Life Insurance For Estate Taxes And Retirement.” Why life insurance? Well, while the fundamental risk life insurance is meant to resolve is the loss of income upon the death of a breadwinner, it can cure the problem of illiquidity when estate taxes are due. That is especially helpful if real estate or other illiquid assets are what is driving your estate to taxation in the first place.

These sorts of insurance already have to be balanced so as not to create further tax liabilities. How does the life insurance work for you in life? As you can read the original article, there are ways to draw upon it in the form of a loan for retirement income without actually eliminating the death benefits payout.

There is much to say on the topic, but knowing the option is there can make a world of difference in how you structure your affairs. What else can you do and what else are you concerned about? When considering life insurance, remember to consult with competent estate planning legal counsel.

You can learn more about this topic as well as other strategies on our website under the tab entitled: estate planning in Virginia. Be sure you also sign up for our complimentary e-newsletter so that you may be informed of all the latest issues that could affect you, your loved ones and your estate planning.

Reference:  Forbes (June 11, 2014) “Life Insurance For Estate Taxes And Retirement




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We've been putting together as many resources as possible so that we can continue to help:

  • If you’re a current client with a signing appointment or a prospective client with a consultation and would prefer that meeting take place in your own home, we can accomplish that with a little bit of pre-planning on our part and with the addition of a laptop, smartphone, tablet or other computer in your home to facilitate this virtual meeting. For those of you that need to sign legal documents, that too can be accomplished with the use of a webcam (FaceTime etc.), so that we can witness and electronically notarize all of your important legal documents.
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Update to our Process

The unprecedented coronavirus pandemic has taken our entire country by surprise. We understand how difficult this time is for America’s businesses and families.  However, we believe it is vitally important that we make every effort possible to continue to offer solutions that avoid disrupting our important partnership with you, your family and friends.  As you know, estate planning is not something that should wait for a more convenient time, therefore the opportunity to address your important goals both during and after this crisis should not wait.  To that end, we have added the option of a ‘virtual consultation’ to our office process.  You will now have a choice of either meeting with us in our office or in the comfort of your own home.