Strategies for Managing Your Legacy &
Financial Future

Legacy Planning

Legacy planning goes beyond financial considerations to create a lasting impact. It involves intentionally designing the non-financial aspects you wish to leave behind, such as your values, beliefs, stories, and the causes you’re passionate about. This process provides an opportunity to share your wisdom, experiences, and life lessons with future generations.
  • Preserving Your Values: Legacy planning enables you to pass down your values and beliefs to your heirs, ensuring that your ethical, moral, and philosophical principles endure.
  • Telling Your Story: It allows you to document your personal history and experiences, preserving your life story for generations to come.
  • Philanthropy: You can establish charitable foundations, scholarships, or endowments to support the causes you care about.

Managing Assets and Transfers

Estate planning primarily focuses on the financial aspects of your assets and their efficient distribution. This involves creating legal documents, such as wills and trusts, to ensure your property, investments, and other assets are transferred to your intended beneficiaries according to your wishes.
  • Asset Distribution: Ensures a smooth and legal transfer of your financial assets to your heirs, minimizing legal complications and disputes.
  • Tax Efficiency: Helps reduce estate taxes, preserving more of your wealth for your beneficiaries.
  • Protection: Shields your assets from potential creditors or legal claims.
  • Guardianship: Allows you to designate guardians for your minor children, ensuring their care and well-being.

Legacy Safeguard offers comprehensive services to help individuals plan and preserve their legacy. These services include legacy planning to document important information and share memories, estate planning support to connect with specialized attorneys, end-of-life planning guidance, and support for survivors, including grief counseling. The membership provides a range of benefits to ensure that one’s legacy is protected and remembered. Note that Legacy Safeguard is not an insurance policy, and funeral-related fees are not covered by the service. For more details, visit Legacy Safeguard.

Final Expense Insurance

Final expense insurance is a type of life insurance designed to cover the costs associated with a person’s funeral and other end-of-life expenses. It provides a death benefit that can be used for funeral services, burial or cremation, medical bills, and other outstanding debts.
Typically, these policies offer lower coverage amounts compared to traditional life insurance and are aimed at easing the financial burden on surviving family members during a difficult time. They are often easier to qualify for, with simplified underwriting processes.
Every day, families face the emotional and financial challenges of saying goodbye to loved ones. A traditional adult funeral, including a casket and vault, averages over $10,000. Additional costs for flowers, limousines, and obituary notices can add thousands more, often pushing the total cost beyond $13,000. Many people wish to avoid leaving this financial burden on their families when they pass away.
Provide your family with the gift of life insurance and the reassurance that they won’t need to dip into savings for your final expenses. By planning, you ensure their financial stability and peace of mind during a difficult time.

If You Die Tomorrow, Could Your Loved Ones Pay the Expenses?

Items to consider when figuring the cost of funeral and burial arrangements:
  • Headstone and engraving Opening and closing of the grave
  • Casket Forwarding and/or receiving deceased
  • Use of viewing and/or ceremony facilities from out-of-town location
  • Professional funeral service charges Hearse
  • Transfer of deceased to funeral home Burial Vault
  • Obituary notices Grave plot
  • Cost of death certificate Legal fees
  • Embalming

There Could Even Be Expenses You Haven’t Considered.

  • Mortgage
  • Credit card payments
  • Utility bills
  • Outstanding medical bills
  • Loss of spouse’s income
  • Family’s loss of income due to time off from work
  • The cost of food, clothing, and transportation
  • Music, clergy, and other administrative costs
By purchasing a life insurance policy, you can rest easy knowing that your family will have the extra support of an income tax-free death benefit to help cover those unexpected costs.
  • Lifetime Protection: you will never have to worry about losing your coverage
  • Guaranteed Coverage: you can be covered no matter your health history
  • No Medical Exam Required: just answer a few simple medical questions
  • Rates Never Increase: the affordable monthly rate you start at will be the same rate you will pay for the life of the policy; your rates will not increase or be canceled because of age or health

Additional Benefits to Help You and Your Family

  • Accidental Death Benefit Rider: at no additional cost, this rider provides a benefit of two times the base death benefit if the insured dies as a result of an accidental injury within 90 days of the injury. In addition, it will provide a payment of three times the base death benefit in the event the death is a result of accidental injury while riding as a fare-paying passenger in a Common Carrier.
  • Accelerated Death Benefit Payment Rider: at no additional cost, if the insured is diagnosed with a qualified terminal illness that results in a life expectancy of 12 months or less, we will advance up to 50% of the death benefit payable under the policy. The available benefit will be reduced by the amount of any outstanding policy loans and will not exceed $20,000. The minimum accelerated benefit is $1,000.
  • Accidental Death Benefit: at no additional cost, if death occurs as the result of accidental bodily injury within the first three years of the graded death benefit period and within 90 days of the injury, the full death benefit is payable.
  • Child and Grandchild Term Rider: you have the option to purchase coverage for a child or grandchild that is at least 15 days old and under the age of 17. The Child and Grandchild Term Rider provides insurance for the insured child until they reach the age of 25. An eligible child is defined as any natural child, stepchild, or legally adopted child of the base insured or the base insured’s child. Coverage is issued in units of $1,000 up to a maximum of the lesser of $5,000 or the base policy face amount.

Inherited Retirement Account

The SECURE Act 2.0, enacted in 2022, introduced significant changes to the rules governing non-spouse beneficiaries of inherited 401(k)s and IRAs:
  • 10-Year Rule
Most non-spouse beneficiaries, including adult children and grandchildren, are required to withdraw the entire balance of the inherited account within ten years of the account owner’s death. For minor beneficiaries, this 10-year period starts when they reach the age of majority.
  • Required Minimum Distributions (RMDs)
In 2022, the IRS proposed regulations stipulating that distributions should be made as soon as possible within 10 years, with the entire balance to be distributed by the end of the final year. However, due to confusion and implementation challenges, the IRS has delayed these regulations until 2025.
  • Taxation
Withdrawals from inherited accounts are taxed as income. Beneficiaries can employ various strategies to mitigate the tax impact, such as maintaining a Roth IRA until the end of the 10 years or spreading withdrawals out over several years to minimize annual tax liability.
  • Strategy
Withdrawals from inherited accounts are taxed as income. One potential strategy to manage this tax impact is to use the distributions to fund a life insurance policy. Here’s how this might work:
  • Annual Distributions: Take annual distributions from the inherited IRA or 401(k) over the 10 years. This can help spread out the tax liability rather than taking a large lump sum at the end of the ten years, which could push you into a higher tax bracket.
  • Life Insurance Investment: Use the proceeds from these distributions to purchase a life insurance policy. By investing in a permanent life insurance policy, such as whole life or universal life insurance, the beneficiary can create a tax-advantaged vehicle for wealth transfer.
  • Tax Benefits: Life insurance proceeds are generally income-tax-free to the beneficiaries. By converting taxable distributions into life insurance, the overall tax burden on the inherited assets can be reduced.
  • Estate Planning: This strategy not only provides a tax-efficient way to handle the distributions but also can be part of a broader estate planning strategy. The life insurance policy can provide liquidity for estate taxes or serve as a financial legacy for future generations.

Example

Suppose you inherit a $500,000 IRA. Under the 10-year rule, you might withdraw $50,000 annually.
Assuming a 25% tax rate, you would owe $12,500 in taxes each year, leaving $37,500.
If you use this net amount to pay the premiums on a life insurance policy, you could potentially create a significant tax-free benefit for your beneficiaries.

Considerations

  • Financial Stability: Ensure you have the financial stability to cover the life insurance premiums without relying solely on the IRA distributions.
  • Policy Selection: Choose a policy that fits your long-term financial goals and estate planning needs.
  • Professional Advice: Consult with a financial advisor or tax professional to tailor this strategy to your specific situation and ensure it aligns with your overall financial plan.
By thoughtfully planning the use of inherited IRA or 401(k) distributions, beneficiaries can mitigate tax impacts and create a lasting legacy through strategic investments in life insurance.