[REPLAY] Leveraging Life Insurance in Challenging Wealth Transfer Cases from Prudential

Recorded 05/09/2024

This month’s sales idea on the Trimester Sales Strategies site is Estate Equalization. This month we will discuss how to help clients prepare for an estate planning challenges they may face: How to equalize their estate among their heirs when there are assets like a favorite piece of real estate or a business where not all of the family members are involved. 

By attending the webinar:

• You will be exposed to a life insurance–based planning and revenue generating opportunity that you may not be currently thinking about for clients.
• You will gain an understanding of the value of the planning opportunity while seeing our Advanced Planning Team’s expertise.
• Following the training, I will set an appointment with you to bring your Book-of-Business + LEADS distilled down to those clients who may fit the planning strategy, and we will discuss those opportunities as well as next steps to setting a joint meeting to pursue those opportunities.

Let’s work together and get you started on using this sales idea.

Let’s Identify:

• A business-owner client
• Some of their family members are active in the business
• Some family members are not involved in the business, but the client wants all heirs to inherit equal shares of the estate
• The business accounts for more than half of net worth
• Interested in another source of funds, other than the business, to provide for a spouse or heirs who are not active in the business

Attached Case Study:

• Business owner client has two children, one involved in business (Child 1) and one not (Child 2)
• Client’s total estate is $4 million ($3 million business value, $1 million other assets)
• If client leaves $3 million business to Child 1, Child 2 receives $1 million of other assets- 2/3 less!
• Solution: Sell part of the business to Child 1, and give the rest as a bequest
  • Child 1 and parent enter into binding buy/sell agreement obligating Child 1 to purchase some or all of the business
  • Child 1 purchases life insurance on business owner parent to fund the purchase
  • Business bonuses amount to Child 1 to help pay life insurance premium
  • At business owner’s death, Child 1 inherits $2 million of the business and buys the other $1 million from the estate using life insurance proceeds
  • The estate now has $1 million in cash and $1 million of other assets ($2 million total) to distribute fairly to Child 2

Let’s Talk:

• Are all children or family members involved in the business?
• Are you concerned about leaving equal amounts of your legacy to each?
• How much of your net worth is in the business?
• Do you want to provide your spouse or heirs with another source of funds, other than the business?
• Do you want to make sure your wealth is transferred as tax efficiently as possible?
• Customizable Estate Equalization Pru Designs illustration is approved for client use.