Jumbo IRA or Pension - 5 Major Income and Tax Advantages of an LAP Plan |
|
By: Steven W. Allen Posted: 2007-11-17 04:05:11 |
|
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 estateThink 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. |
| Trackback url: https://article.abc-directory.com/article/3501 |