We all know that the role of life insurance is to provide to your beneficiaries after you die. Those who benefit greatly from the life insurance are the families that rely heavily on the earnings of the policy holder. Many people always have a concern of the high taxes that they will incur as a result if the life insurance tax. Let we now have a look at how you can ensure that your beneficiaries are able to keep more money by eliminating the high taxes. This is by forming a restricted property trust life insurance that ensures that you reduce your taxes.
The necessity of this comes from the fact that your benefit due to death is added to the value of your estate. If it is very high, it can go beyond the levels of exemption and put it in the level of high taxation. Therefore you will find that your life insurance may cost your family a lot of their money. As you know the taxation rate of estates is very high as it ranges from 35 to 55 percent on the total sum of your estate.
This brings in a lot of stress to your family as you they will have to pay the taxes within a short period of nine months after death. Having gone through this you will, therefore, see the need of forming an irrevocable trust such as restricted property trust life insurance. The restricted property trust life insurance is an arrangement that helps the wealthy in the society to reduce the taxes they have to pay. Let us now have a look at how the arrangement helps to reduce the estate taxes.
The method of working of the restricted property trust life insurance is by selling your life cover outright to your trust. The trust will then be paying premiums, and they will hand over the death benefits to your family after death. Therefore, by this arrangement, you will not own the death benefits as the ownerships shifts to the trust and this your estate size is as well brought down. As a result, the amount of estate tax will as well be kept very low.
This is by reducing the value of your estate greatly to the level of federal taxes thus you end up paying very fewer taxes. To get the assistance of forming the trust, you should search for the best attorney on your area. He or she will assist in the formation, and then you will select a trustee to hold your trust. For better functioning of your restricted property trust life insurance, it is always best when it is handed over to a bank as a trustee to run its affairs.