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Financial Planning > Tax Planning

A conversation about efficient wealth transfers

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So you have heard about this concept called “Wealth Transfer” but aren’t sure how the conversation would go with your prospect?

Let’s listen in to an advisor being trained on this concept to help seniors manage their nest egg.

Question: So what is this “Wealth Transfer” concept I keep hearing about?

Answer: It’s a way to pass assets to beneficiaries’ income tax free and help your clients avoid probate process.

Question: So who receives the value of the estate or “nest egg”?

Answer: Their beneficiaries such as:

  1. Family
  2. Loved one’s
  3. Favorite charity
  4. Church
  5. IRS

Question: Really, what does a “nest egg” consist of?

Answer: A person’s “nest egg” can consist of:

  1. Mutual funds
  2. Stocks & Bonds
  3. 401k’s & IRA’s
  4. Real Estate
  5. CD’s, Money market Funds & Savings
  6. Annuities
  7. Life Insurance

Question: Ok, then what would be the main financial concerns of my senior clients?

Answer: Senior clients’ main concerns could center around:

  1. Outliving their “nest egg”
  2. Becoming dependent on others
  3. Taxes
  4. Inflation (now and in the future)
  5. Inability to leave something ($) to their children or grandchildren

Question: That seems reasonable, so what could take away from their “nest egg”?

Answer: Some of the life events that could take away from their “nest egg” could be:

  1. Inflation (now and in the future)
  2. Income taxes
  3. Capital Gains Tax
  4. Gift Taxes (Federal)
  5. Federal & State Estate Taxes
  6. Inheritance Taxes (state)
  7. Probate costs (executor commissions & attorney fees)

Question: Ok I think I’m getting an idea of the “nest egg” concern, just not sure how I can help?

Answer: Let’s look at a Wealth Transfer Continuum concept

CD’s   →                                ANNUITIES    →                               SPWL

(Tax & Probate= Yes)         (Probate= No Taxes= Yes)             (Tax & Probate = No)

Question: Ok, I’m starting to see how this Wealth Transfer concept might be the right solution for some of my clients. Kind of like preventing a time bomb from going off, right?

Answer: Let’s look at what “Tax Time Bomb’s” might be waiting for your client.

  • Issue for Annuities
  • Tax Deferred, Not Tax Free
  • Great for Growth and Income, not for Wealth Transfer
  • Beneficiaries will pay taxes on their tax bracket when they receive the funds
  • SPWL will Avoid those taxes

Let’s look at a “Tax Time Bomb” Example (substitute with numbers from your own products)


Wealth Transfer

Annuitant Dies:


Surrenders Annuity:


Purchases SPWL:

Annuity Value:



Surrender Value:





Purchase Price:

- 50,000


Purchase Price:

- 50,000




Taxable Amt:

= 50,000


Taxable Amt:

= 50,000


Face Amt:


Tax Bracket:

X 30%


Tax Bracket:

X 20%




Tax Paid (Beneficiary):



Tax Paid (Annuitant):



Annuity Value:



Surrender Value:















*assuming no surrender charge

Question: Ok, now I get it, this is a way to pass on their estate without the unintended consequences of other methods. Interesting, so who is right for this Wealth Transfer concept?

Answer: Prospects that might be a fit for a Wealth Transfer vehicle may include;

  1. They do not require the funds for income or living expenses
  2. They want to pass on a legacy
  3. They have concerns regarding a nursing home or a terminal illness
  4. They understand and believe in the concept of not buying a policy but repositioning their wealth through a single premium.

Question: Ok, I think I have the concept, it’s another tool I have to help my clients meet their needs now and in the future in a way that best suits them and helps me do the right thing by my client that is specific  for their individual situation. I understand it may not be right for every client however for the clients it is right for it’s the solution they may not have considered without my willingness to broach the subject.

Got it, thanks!


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