With an asset protection plan strategy, you provide for taxes through life insurance. In other words, to avoid hefty tax bills and to protect what you value in your estate, you can utilize an asset protection plan strategy. Since registered assets are taxed between 39-48%, and capital gains on assets are taxed from 20-24%, it could happen that the cash in your estate is not enough to cover the taxes on all other assets, such as property. Therefore, your loved ones may have to sell some assets in your estate to fund the interest. With an asset protection plan, you let your life insurance pay your estate’s taxes and ensure your estate is kept intact.
An asset protection plan strategy pays your tax bill with a universal life insurance policy. Thus, annual payments have dual benefits: first, a part of your payment goes towards your premium which increases your estate’s worth in providing a death benefit; and second, the money paid out offsets your tax bill. The other portion of your payment can be invested in a variety of ways – it’s up to you. So, with an asset protection plan, your policy grows to meet your tax responsibilities, your family receives the full value of the policy (tax free), and your family can use the proceeds to pay the taxes on your estate.
If you want to equally divide your assets without taxes taking a large portion, an asset protection plan may be your best option. It is best to speak with us to see if an asset protection plan strategy is best for you. We will be able to determine if asset protection is the most cost-effective way to ensure your loves ones are not overwhelmed with taxes when they inherit your estate.