Happy June, fellow investors! Money comes in different shapes and sizes. I’m not talking about the physicality of money. I’m talking about the classification of money. Some assets are for us to use now to buy things that we want. Some are used to create an income stream for now or later. But some of us are lucky enough to have “throw it over the fence money”. This is my classification for assets that we don’t expect to need. Assets that we can throw over the fence to our heirs or charities. Now, there are efficient ways to do this and there are inefficient ways.
Let’s focus on an efficient way. I have a client that told me that she had $400,000 in a bank CD, earning 3% interest. She said that she didn’t need, and wouldn’t need, the money and was not taking any income from it. I asked what she was saving the money for. She said that she had worked her entire career for a college library. She was leaving it, in her will, to the library. I showed her how I could reposition the $400,000 into a single-premium, guaranteed life insurance policy, and turn her $400,000 into a $700,000 tax-free death benefit for the University. She could gift the policy to the college now and take the write- off, or make the college a beneficiary and retain ownership of the policy. She didn’t need the tax deduction, so we made her the owner of the policy. This way, she could change her mind, as well as have complete control and use of the cash value of the policy. The policy also had a great Long-Term Care benefit that she could use if she needed. This client was 68 years old at the time and in average health.
This is just one example of an efficient transfer method for “over the fence” money. If you would like to explore this option further, please let your American Retirement Advisor know. In future issues, I will share some other “over the fence” strategies.
Enjoy June and stay cool.
Call American Retirement Advisors to see if we can assist with recommendations for your “fence” money