What is your intention for your wealth?
At the Private Bank, working with wealthy families has given us valuable insights into their priorities and values. Wealth protection and preservation—and ensuring families are cared for no matter what happens—are almost always among their most important goals. Whether you seek protection for your business, your loved ones or both, life insurance can help give you peace of mind.
Life insurance can bring peace of mind, tax efficiency and liquidity to families. Listen to our Private Bank Wealth Strategist, Christopher Kelly, who discusses why life insurance can benefit your wealth plan.
Families with wealth may consider whether life insurance should be a part of their plan. Although many think of insurance as fulfilling an income replacement need providing additional funds should a breadwinner's life be cut short, that is only one potential use case. It's a mistake to think that when a family's assets have grown beyond that need, insurance is never warranted.
Our clients may consider life insurance for some of the following reasons: First, conveying a business or some other illiquid asset intact. Generally, the estate tax is imposed on the value of your assets, whether liquid or not, but the tax needs to be paid with readily available funds. Business owners frequently look to life insurance to provide those funds so that the business can remain intact. Related uses of life insurance can include funding a buy-sell agreement with co-owners and equalizing an inheritance if an owner wants to leave the business or other asset to some of the heirs and liquid funds to others.
Second, addressing other specific estate planning needs. As an example, providing a legacy to children of a first marriage so that other funds can pass to the current spouse and children of the current marriage. Another potential use could be providing dedicated funds for a parent or sibling with the other estate funds passing to descendants.
Third, serving as part of a diversified trust portfolio. Insurance can be a tool used to offer an element of diversification. Life insurance removes the policy benefit from the taxable estate and allows the death benefit in most cases to pay income tax-free to the trust. It can also offer certainty around legacy planning and trust valuation.
The starting point is always to understand your goals. That helps us identify, plan, and execute strategies to help you achieve them. Also, your needs evolve over time and part of working with an advisor involves a regular review of the existing plan to determine if it still achieves what you want to accomplish and what aspects of that plan might change over time. Purchasing life insurance is a nuanced decision and your JP Morgan team can help guide you through the thought process whenever you're ready.
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