Case Study

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Case Study

Client/Challenge:

Mr. and Mrs. M, aged 72 and 68, both retired, are the custodians of a Holding company with real estate, equities and fixed income investments totaling $20 million. The entire portfolio is "never spend money" as they plan to pass it along to their children and grandchildren. They pay income tax every year at over 50% on the business investment income. They wanted to leave more for future generations and less to the tax department.

Without WEALTHinsurance®:

The growth of the "never spend money" would continue to be impaired by high taxes each year and would be taxed again when withdrawn from the company for their heirs.

Outcome:

The couple no longer gives up half of the annual business investment income to the tax department, so the ‘never spend money’ now grows much faster, unimpaired by annual taxation.  We used a portion of it to purchase a tax-exempt, joint last-to-die life insurance policy, with premiums payable for only 10 years. The policy is fully guaranteed and now provides an equivalent return of 11.5% at death on the 'never spend money' with no market risk or interest rate risk. When the second of both spouses dies, their beneficiaries will receive the insurance proceeds tax-free and the company will distribute the insurance to them without taxation.

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