oprah.chopra@[EMAIL PROTECTED]
wrote:
> I am 31, net work around 450k and projected to grow at 100k/ year.
> A life insurance agent is trying hard to rope me into a plan where I
> can contribute large amounts to a relatively small policy ( ~1-1.5
> million ). He mentioned something about MEC, where you can not
> contribute too much to abuse the system.
>
> Is it a good idea to use life insurance as a way to avoid estate
> taxes? I have already maxed out 401k, roth IRA, and traditional IRA.
> I plan to open a SEP IRA next.
Well hang on...is the sole reason for getting life insurance the estate
tax? You do realize the estate tax scheme in the US is very much in flux
at the moment, yes? And that even in a rollback to the old levels you
aren't anywhere close to the level of paying it? Perhaps state taxes
depending on your choice of heirs and home state, but not federal estate
taxes.
Ask the agent what assumptions he's making about a) your net worth
trajectory b) the future estate tax scheme and c) your marital, family,
charitable, and gifting plans when selling this policy. I can't imagine
how he's framing a case for a 31 year old who is well below the level
where the estate tax is even a consideration.
Sure, you're building wealth, but given that you are very early in the
process of accumulating it, minimizing estate tax is an odd goal.
Unless you know that you are coming into a pot of money that you believe
is certain to exceed the level where your estate would be taxed - is
that the case?
And even then...estate planning - factoring in the estate tax issues -
begins with your will, any trusts, etc. If you haven't addressed that
you're putting the cart before the horse. Insurance agents aren't estate
planners, attorneys are...most people address that piece, and then see
if life insurance fits into the estate plan. Yes, "if".
-Tad
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