Tax Efficient Estate Planning – Life insurance is an instrumental piece of a financial plan for a myriad of reasons. One characteristic of life insurance is that the death benefit is tax free to the named beneficiaries under normal circumstances. A majority of assets held in the United States today are held within qualified accounts, such as 401ks, IRAs, 457 and 403B plans. These qualified accounts are taxable upon distribution to your spouse, children, and other people. You can pass a qualified account to a spouse without creating a taxable event until the surviving spouse takes distributions. Non-spouse beneficiaries are required to drain the qualified account within 10 years. Life insurance creates an estate of tax free funds without the taxation burden. By utilizing tax efficient estate planning, a person can blend the taxable and non-taxable estate. This tax efficient planning is a wonderful opportunity to include the Kingdom in your estate planning.
Scripture states in Psalm 24:1 that “The earth is the Lord’s, and all it contains. The world, and those who dwell in it”. We are stewards of God’s assets throughout our lifetime, including at our death. It is standard practice that people leave their assets to their family at death without regard to “ownership” and taxation.
Currently, a person can name a non-profit organization as a beneficiary of their qualified accounts without it being a taxable event to the charitable entity. A wise person should review their current beneficiary designations, life insurance plans, and their obedience to the Kingdom regarding their estate planning.
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