Home Add to Favorite Contact Submit  
             07 March, 2021

Category:  Articles » Finances » Estate-Plan-Trusts


Jumbo IRA or Pension - 5 Major Income and Tax Advantages of an LAP Plan

         Views: 2043
2007-11-17 04:05:11     
Article by Steven W. Allen

Do you have a jumbo IRA or pension plan? In the next 2 minutes you will learn how to increase your spendable income while you live and keep it from being taxed as much as 75% after you die!

Just think, you can reduce the estate tax by using an LAP to remove this large asset from the value of your estate, provide the funds to pay any taxes due and at the same time ensure your beneficiaries receive their inheritance.

Liquid asset protection plans (LAP Plans) are designed primarily to benefit those with large tax-deferred accounts such as jumbo IRAs or pension plans. These are subject at death to both an estate tax and a deferred income tax. This total tax toll can be as high as 75 percent! One of the best ways to protect these assets is by using a LAP Plan.

With a LAP Plan, spendable income is increased, income is guaranteed for life, tax-free income is distributed to the heirs at death (thus increasing the inheritance to them), and liquid assets are removed from the taxable estate, thereby reducing estate taxes. The LAP Plan works in the following manner and sequence:

Step 1--

The liquid asset (for example, a jumbo IRA) is transferred to an insured tax-preferred lifetime guaranteed income annuity.

Step 2 --

A tax-free life insurance policy is established, using an ILIT (Irrevocable Life Insurance Trust) or an FLP (Family Limited Partnership). This policy is outside of the taxable estate. The policy death benefit will be equal to or greater than the transferred liquid asset.

Step 3--

Tax-preferred income is paid from the guaranteed annuity for the life of the transferor.

Step 4--

Upon the death of the insured, the annuity income stops and the life insurance death benefit is paid to heirs outside of the taxable estate.

Repositioning the asset into the LAP Plan will:

1. Increase income enough to pay all insurance costs
2. Pay any income tax which may be due
3. Guarantee future income
4. Usually create greater spendable income for the person establishing the plan
5. Remove this large asset from the taxable estate

Think about using this elegant method to protect large tax-deferred accounts that would otherwise be subject to both estate and deferred income tax. See your estate planning attorney or financial planner to ask if an LAP is the right plan for you.

Visit http://www.WillsvsTrusts.com for tips and tools on Estate Planning. You are also invited to subscribe to his monthly newsletter Secrets of Wealth Preservation. Steven W. Allen has been a practicing Estate Planning attorney for over 30 years and is the author of four books including "You Can't Take It With You...So How Will You Leave It Behind?". Go to Estate Planning Doctor to get your copy with over 50 free estate planning tools and action items.

Specialized in: Jumbo Ira - Pension
URL: http://www.willsvstrusts.com
Print article      Bookmark this page
Related Articles 
Who Should Be an Executor - Top Tips For Choosing the Right People (Popularity: ): Being an Executor in a Will is an important role with quite a bit of responsibility. When you are writing your Will the choice you make on who will be your executors will have an impact much later on when unfortunately you will not be around. Your Executors will be carrying out your wishes as you have stipulated in your Will. They have no say in who gets what (unless ...
Guide to the Probate Process (Popularity: ): The legal process by which the state oversees the distribution of the estate to heirs and confirms all debts paid is known as probate. Probate will occur whether or not the deceased has a will. Probate can be best though of as a collection of rules which guides the transfer of an estate.The first step of probate is the swearing in of a personal representative. The person also known as ...
The High Cost of Probate - Finding Cash to Pay the Bills (Popularity: ): Dealing with the death of a loved one is extremely hard and to make matters worse, when it comes to probate it can get even harder. For the loved ones left behind, sometimes the cost of probate can become overwhelming and in many cases, unaffordable. Even when an inheritance is expected, it could be many months, even years before the inheritance is actually received. What is even more unfortunate is ...
Giving the Gift of Legacy (Popularity: ): Have you ever stopped to wonder what gift your children or grandchildren would most value from you long after you are gone? The answer may be simply your story. Nothing could be more priceless to a child than to read and reflect on words of a loved one, drafted to transmit a three-dimensional perspective in a two-dimensional note. Not everyone can pass along a financial legacy, but everybody can transmit ...
The Practical Workings of Trust Funds (Popularity: ): You've heard about people using trust funds for everything from handling their affairs while they travel to providing for orderly distributions to heirs when they pass away. So, just how do these funds work?Parents often wonder how to provide for their children when they grow older, and one of the best ways to do so is to set up a trust fund. A trust is a logical step for those ...

Related Business 
Capital & Income Solutions Limited (Popularity: ): Pension Release is a flexible alternative to buying an annuity. If you are 55 years or older and have an appropriate amount of your pension fund can release a lump sum of money tax-free up to 25% of the pension without having to retire or income.
Pension Plan (Popularity: ): Compare pension plan quotes and chose best plan to get regular income after retirement. We helps to compare best offers from leading insurance companies
Annuity (Popularity: ): The Pension Adviser can advise you on Income Drawdown, Annuity & Pension Advice. Contact us for information on your Annuity. We can provide help and assistance with all your pension issues, including those relating to Personal Pensions, Group Pensions, SIPP, SSAS, Tax Free Cash queries, Annuities and Income Drawdown.
Cash For Your Pension (Popularity: ): We can assist you to get tax free cash for your UK pension, irregardless of how old you are. This process has been in place in one form or another for the last 17 years using recognised methods and standard UK pension transfer legislation. With the help of an Umbrella Pension Trust we can help you release or cash in up to 85% of the value of your UK pension ...
CuteTax Inc. (Popularity: ): Canadian income tax - Find what you need to file your personal income tax returns, including supplementary information on income tax benefits and deductions. Tax Chopper helps you regarding it because you money is nations resource.
Gary P Gauvin LLC Income Tax Services (Popularity: ): U.S and Canadian income tax specialists. Cross border income tax preparation for US citizens in Canada and Canadians in U.S. California RRSP planning
Sipp Appproved Investments (Popularity: ): A Sipp is a sort of DIY pension. Unlike a regular pension, where the pension company limits your choice of investments it manages and decides for you, a Sipp gives you a choice where your pension is invested in and with that you can influence your pension fund size and income.
LIC India Insurance (Popularity: ): LIC of India provides pension plan or retirement plan, term insurance, children plan, ULIP plan and more. Online LIC India information with some best insurance plans like tax saving schemes with low premium and high returns insurance.
Indian income tax (Popularity: ): Our 'India Tax System' section deals with all rules and regulations related to India tax structure including but not limited to income tax, wealth tax, service tax, gifts, salary, perquisites, retirement benefits, capital gains, house property, TDS and all related deductions. We also provide information on where and how much money you can save by investing.
Property Tax Help For Low Income (Popularity: ): Property tax appeal is tedious process for many tax payers. You can found the best way to save your property tax with us at 1800 law firm. Our expert property tax consultant will helps you for paying property taxes and also provide property tax help for low income.