Incorporating a Universal Life Insurance in your wealth planning secures not only your wealth but also your family’s future. A well thought business succession plan helps in keeping the legacy you built intact for generations to come, and including a universal life insurance is your key to achieving that goal. And here are the reasons why.
A very lucrative and attractive solution to address significant issues with legacy planning is the ULI (universal life insurance). It’s basically an extra large policy that leaves a guaranteed benefit receivable upon the death of the policy owner. It provides a facet to accumulate cash value and offers solutions to the following legacy planning and succession planning problems.
What is The Use of Universal Life Insurance for Estate Planning?
1. Security During Business Liquidation
The death of the critical person in a company, such as CEO or the Chairman, or a business can be crippling for a company, especially if there are debts to be paid off. A Universal Life Insurance helps in creating a customised wealth planning structure that will make sure that the family and the business has a large reservoir of resources such as cash and capital that can be used to settle debts. By having this well laid out plan, a business owner can ensure that his or her business will continue even if he or she is no longer around. This step is vital to any high-net-worth-individuals succession planning process.
2. Proper Delegation And Distribution of Shares
A lot of drama and problem has stemmed from the incorrect distribution of business shares. Not everyone who is a member of a business owner’s company knows how to run the business. The conventional mentality of distributing company shares evenly among the heirs has to fly out the window. This way of dealing with important shares creates friction and not unity. A Universal Life Insurance establishes a strategy to distribute shares only to responsible family members who can contribute to the business. It also creates a large cash barrel which will be distributed among family members who did not receive shares. Not only will this ensure the continuation of the business but it will also be pivotal to creating a wealth management plan that can survive the tides changing executive hands.
3. Wealth Creation
Due to the build-up of cash during the course of the Universal Life Insurance, numerous families have used it as a means of replenishing lost assets due to the every changing commodity cost and the numerous financial crises that can rock a family’s wealth foundation. Through a Universal life insurance, businessmen can leave a valuable legacy to their descendants.
4. Efficient Tax Planning
Protecting assets from heavy tax blows should be put into consideration, as such setbacks can weigh down the next generation who will handle a business’s assets. Even though Singaporean’s can enjoy the freedom of not having estate duty imposed on inheritances, the same cannot be said of properties and assets located in other countries.
The United Kingdom and the United States of America have estate duty or inheritance tax reaching as high as 40% of the estate’s worth. Owning properties in Japan can rack up an estate tax of 55% of the whole estate. A Universal Life Insurance policies can offer protection from such heavy estate taxes. Making an efficient tax plan is vital if businessmen intend for their monies to go to their heirs and not to the government’s pockets.
Integrating a Universal Life Insurance into an estate plan guarantees that the hard work done now by businessmen will not end with the next generation but establishes a silk road for all generations to come.
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