| A year has passed and interest has accumulated tax | | | | conversion option. Either way your making a sale. |
| deferred, and and the IRA has increased in value. Why | | | | #3 Make the children the owner, or create a I.L.I.T and |
| not take a portion of the IRA and leverage the | | | | have the I.L.I.T the owner. |
| accounts and use them to pay for a life insurance | | | | Remember that your trying to increase the estate |
| policy. This method of leveraging a persons assets to | | | | value, and protect the assets from a nursing home |
| gain a larger estate without risk is called an Arbitrage. | | | | care lien for the client, so ownership of the life policy is |
| The very simple procedure to follow is to: | | | | a big issue, along with who is going to pay for it. Keep |
| #1 Withdraw 10% from the Annuity Accounts and take | | | | these ideas locked away for when you need to do |
| out the State and federal taxes | | | | some estate tax, and Medicaid planning. |
| Take advantage of the 10% penalty free withdrawal | | | | #4 Continue to withdraw the 10% yearly to pay the |
| option offered in the annuity contract. How do we | | | | premiums. |
| make sense of this, and why do we do it? Well let's | | | | A word of caution is to make sure that you do your |
| look at who will be paying taxes and when. The | | | | math conservatively. If the market does not keep up |
| planner should do a Tax return comparison showing | | | | to your withdrawal rate then there will be a declining |
| the client paying income taxes or the clients children | | | | value in the annuity account, so the 10% free |
| paying the taxes when they inherit the IRA. Show the | | | | withdrawals could be less each year causing a liquidity |
| clients 2008 tax tables and ask them for a | | | | problem. The best advice here is to be conservative. |
| guesstimate of what their children's earned income | | | | What are the benefits of this idea, and why is it my |
| may be compared to theirs. Assume that the children | | | | favorite method. |
| inherited the IRA account in the future, and estimate | | | | 1. Everyone saves on income taxes. |
| what the MRD will be for the children in a given year. | | | | 2. Can be Medicaid friendly |
| The idea is to show who will be in a higher income tax | | | | 3. Avoids probate |
| bracket. | | | | 4. In most cases the size of the estate increases |
| #2 With the remaining money purchase a no lapse | | | | significantly. |
| guarantee U.L Policy. | | | | 5. Not only do you get the commission on the life policy |
| In order to properly make this work you should apply | | | | but there are renewals on the life policy. |
| for the life insurance policy first. In the event that they | | | | 6. The client will be open to giving you a referral which |
| are insurable this option works best when planning, but | | | | can turn into an annuity lead or annuity sale. |
| in the event that they are insurable use the ROTH IRA | | | | |