AALU Report 13-12

Leave large sums for children and grandchildren

We want to share a technique that can help maximize returns for the benefit of your children and grandchildren:

We recently met with clients who wanted to maximize the return they could receive from their investments, for the benefit of their heirs.  At the end of 2012 this couple had funded an irrevocable trust with a portion of their investment portfolio.  Instead of investing the entire trust amount directly into the stock or bond market, they used a portion of the trust’s conservative holdings to purchase a last-to-die life insurance policy guaranteed to remain in force until the second to die. Our clients were a couple aged 65.  The after-tax death benefit to expectancy (age 93) is projected to give a compound annual return of better than 7% (equal to 11.6% pre-tax).  If the final death were to be at age 100, the after-tax projected return would be better than 5% (pre-tax equal to over 8%).

Find more details about how to fund an irrevocable trust that holds life insurance in the attached AALU report about Funding Trust-Owned Life Insurance.