Life insurance has long been a planning tool to offset the impact of federal estate taxes or provide financial relief when a family needs it most. One of the most significant events that impacted recommendations by attorneys, CPAs, and advisors was the passing of the American Taxpayer Relief Act of 2012 (ATRA), which increased the estate tax exclusion to $5.25 million for individuals and, with portability, $10.5 million for married couples. This has created many discussions with clients and their advisors as the need for life insurance planning for estate tax purposes might need to be reevaluated.
One common outcome is that there is a reduction in a client's estate tax liability, causing them to reevaluate their current plan and reduce the amount of coverage they are currently funding. This, in turn, frees up liquidity for other parts of their plan and the opportunity to purchase other products and services that are relevant to them today.
The Secondary Market has become a safe and regulated environment for policy owners to liquidate policies that are no longer necessary due to this change in estate tax law and update their current financial plan. New alternatives have been created like the Split Death Benefit Option. This unique opportunity provides a percentage of the death benefit to the policy owner and the buyer takes over the premium payments. get a secondary opinion® of the potential value of your client’s policy at https://ashargroup.com/quiz/
