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Posted by ed on July 19, 2007, 10:32 pm
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> An investment adviser with a national brokerage has proposed
> that my 87 year old mother "invest" about $750K from my
> deceased fathers credit balance trust to purchase a life
> insurance contract on her life so as to leave the heirs "tax
> free" proceeds in the form of the pay out on that policy on
> her demise.
>
> What are the pros and cons of such a plan? I know what I
> think, but am seeking input from those of you who may have a
> better grasp of something like this.
There may not be any FET, but if there is she has a large
enough estate to inherit, even after FET is deducted. The
salesman will be able to retire on the commission he'll make
which shouldn't affect his advice. duh.
If the tax is due to payouts from tax sheltered plans, she
should cash them in and pay the tax herself and her estate
will be reduced by the amount of the tax AND her children
will get the funds income tax free. The salesman may not be
able to retire so soon, however.
And if buying a $1 million policy for a premium of $750K
makes sense, why not make it a REAL windfall and buy $2 or
$3 million of insurance. If it's that good a deal all the
kids will gladly chip in.
ed
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