Wills, Trusts & Estates Prof Blog

Editor: Gerry W. Beyer
Texas Tech Univ. School of Law

Thursday, July 24, 2014

How Matching the Right Beneficiary to the Right Asset Can Save Big

Money BagA married couple did not have an extravagant estate that they would leave behind. They would be under the exclusion amount, but they were not cash strapped either. They had a million dollars in IRA savings and used the $43,000 they were required to take out annually to fund a $800,000 life insurance policy. They named a charity as a revocable beneficiary of the insurance policy. Then they got some great advice. The advice was to swap the beneficiaries, and it was $300,000 worth of advice. By making their children the beneficiary of the life insurance policy, the children will save $100,000 in taxes paid on their inheritance and the charity gets $200,000 more from receiving the larger IRA and will not pay taxes due to their tax exempt status.

See Kelly Kearsley,  A Beneficiary Swap Saves $300K in Taxes, The Wall Street Journal, July 23, 2014.

Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.


Estate Planning - Generally, Estate Tax, Non-Probate Assets | Permalink

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