Tax Planning

Tax planning is an especially important piece of a solid retirement plan. We’ve been helping our clients create plans that not only build net worth, but also give more after-tax income in retirement. This can give you the ability to make more choices on how you spend your time and money in those golden years.

There are three common elements to tax planning for the purpose of minimizing your tax burden:

  • Reduce adjusted gross income
  • Increase the amount of tax deductions
  • Appropriate use of tax credits

Our trusted network of professionals includes Certified Public Accountants, Financial Planners, and an Estate Planning Attorney. Very few Financial Planning firms in the greater Phoenix area offer all of these services under one roof.

Protect Your Loved Ones and Leave A Wealthy Estate

Life insurance has long been a staple in basic estate planning, as it may provide an income tax-free death benefit far in excess of the premiums paid. Federal and state estate taxes may be imposed on all the property that you own at your death, and this tax must be paid from your estate. A life insurance policy that is owned by your heirs, or in an irrevocable trust, will avoid being included in your estate. It can then be used to pay any estate taxes that may be levied at the time of your death.

Life insurance offers one of the best returns on your investment dollar available in the market today. Other useful benefits include:

  • 100% tax-free income
  • Guaranteed interest growth
  • Accelerated death benefits
  • Flexible premium plans

There are two basic types of life insurance: term and whole life. Both provide money for your heirs in the event of your death, but they do so in very different ways.

Term Life Insurance

You pay a premium every month or quarter, and your heirs receive a specified amount if you die. That’s the idea behind term life insurance. The policy lasts for a set amount of time, such as five or ten years. It is very inexpensive for young people. Prices go up as you age. When the “term,” or duration of the policy is over, you have no equity remaining in the policy, and must start over with a new policy.

Whole Life Insurance

This is really a combination of life insurance with an investment strategy. You pay regular premiums, and your heirs receive a fixed amount upon your death. However, the policy is also something like a savings account or investment fund, because your premiums build equity, called “cash value.” The cash value is not taxed, and you can borrow against it.

Life insurance is a critical component to any financial plan. Primarily it protects your family and loved ones from hardship by creating the necessary liquidity needed to continue a comfortable standard of living in the event of an untimely death. It can also be used as an effective tool to generate wealth for heirs, beneficiaries and charitable organizations.

How Much Life Insurance Should I Have?

There is no simple answer to how much coverage is enough. Many factors will influence the decision on how much coverage you need. A few factors to consider include:

  • Will your spouse have child care expenses in your absence?
  • Are there other assets to draw from?
  • Will your children be leaving the nest soon?

SPEAK TO OUR TAX PLANNING TEAM

Contact us to schedule a meeting with a tax planning professional. We will review your retirement documents at no cost and make the appropriate suggestions with your retirement goals in mind.

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