In Luke 12, the big barn parable tells the story of a rich man who grew extra crops and had no place to store them. He decided he would tear down his barn and build a larger one, which would give him the time to relax and take life easy. God told him he was going to die that night, and then what would happen to all the crops he was storing for himself. God called the man a fool!
This same idea can be applied to people who want to leave their large IRAs to their beneficiaries, Robby uses his father as an example. People going with the strategy do not realize the tax implications of what leaving a traditional IRA for their children is going to mean. The taxes are going to be paid by the next generation, which the IRS likes because it usually means they get more money. There are much better strategies out there for leaving money to your beneficiaries!
One of these strategies is to withdraw the money over time, pay a small amount of taxes, and then put this money into paying a life insurance premium. Tom, a CFP at Cardinal, talks about how it is not as hard as people think to qualify for a life insurance policy. Most people will have options. Cardinal has 100 companies at their disposal to choose from.
Robby is surprised to learn that you can even have multiple beneficiaries listed on one life insurance policy, and one of these beneficiaries can be the Church! Life insurance policies allow you to break down in percentages how much of the policy you want to leave to each beneficiary.
Tom talks about a co-worker who was looking at life insurance policy, she was 36, had kids, and her policy got tied up for a few months and she forgot about it. She ended up being diagnosed with cancer and passing within 3 months. She did not even have the money to even pay for the burial. It is never too early to plan for “what if”. Life insurance is not bought to win financially it is bought to protect your family if something happens.
Another great advantage of this strategy is that life insurance benefits are received tax free. As a fiduciary, Hans says it is his obligation to make the tax code work in the best possible way for you. Robbie knows how much money can be left on the table and urges listeners to not make this same mistake. Talk to someone who knows. Life insurance hits in a matter of days, not months or years like probate.
Don’t forget to get your copy of “The Complete Cardinal Guide to Planning for and Living in Retirement” on Amazon or on CardinalGuide.com for free!
You can contact Hans and Cardinal by emailing firstname.lastname@example.org or calling 919-535-8261. Learn more at CardinalGuide.com.