One of the biggest challenges for producers working in affluent markets is to adapt to a constantly changing environment. They must evolve in tandem with new laws, planning techniques and products.
To prudently plan for clients, producers need to understand fully current and pending tax legislation. Producers can provide value-added services to clients by developing creative legal and trust planning solutions in compliance with those laws.
Producers also must understand the latest advances in products–how they work and where they fit into a client’s overall plan. Through the advancement of protection products, agents can access improved solutions. Some companies are creating innovative ways to increase the leverage created through the use of life insurance in planning situations for affluent clients.
Regardless of the future transfer-tax system, many believe that affluent families will continue to be exposed to some estate tax liability. These wealthy individuals often have many financial goals, including the efficient transfer of their wealth, minimizing estate taxation, making charitable bequests and protecting their wealth from creditors.
For affluent grandparents who have earmarked a portion of their wealth to create a legacy for future generations, the dynasty trust can provide a legacy for grandchildren while avoiding unnecessary estate, gift and generation-skipping transfer taxes.
Once a dynasty trust is funded, life insurance can provide an enhanced inheritance for future generations. Life insurance is typically purchased on the life or lives of the grantors, multiplying the original gift.
Innovations in life insurance products can further enhance the wealth of generations to come. Some companies catering to the affluent marketplace have developed options allowing the guaranteed purchase of life insurance on an individual at a future point in time–regardless of his or her future health.
Consider this application in a dynasty trust. To illustrate the leverage we can gain through the use of life insurance–purchased today and in the future–let’s look at the “Stevens” family.
Mrs. Stevens’ late husband built a successful family business. When he died, Mrs. Stevens was left with a large estate. The business passed on to her son, David, who still runs the firm.