This material was not intended or written to be used, and cannot be used, to avoid penalties imposed under the Internal Revenue Code. This material was written to support the promotion or marketing of the products, services, and/or concepts addressed in this material. Clients and other interested parties to whom this material is promoted, marketed, or recommended should consult with and rely solely on their own independent advisors regarding their particular situation and the concepts presented here.
What Is a Blended Family? Husband and wife + Children from prior marriage(s) + Existing assets = Blended family
Planning Concerns • Orderly and equitable distribution of assets among loved ones • Will financial needs of children from previous marriage be met if • Current spouse is considerably younger, or • Close in age to children from prior marriage
Benefits of Life Insurance • Policy benefiting children from prior marriage makes funds available for these children’s financial needs • Purchasing life insurance preserves estate for surviving spouse and/or current family
How It Works • ILIT can help ensure policy death benefit is not included in your gross estate, and thus avoid estate taxes • ILIT also allows you to make annual gifts—possibly gift tax-free—to pay life insurance policy premiums • At death, your ILIT receives death benefit proceeds • Children from prior marriage receive proceeds free of federal estate and income tax • ILIT can assure that bulk of your assets is available for your current spouse and any children of your more recent marriage
Example: The Banks Family • Jim, age 59, and Kathy, age 39: married for five years with two young children • Jim has sizeable estate • Jim has three children from prior marriage, all over 25 • Kathy not married previously
Jim Banks’ Goals and Objectives • Provide significant income stream for Kathy and their children • Leave sizeable inheritance for children from prior marriage • Maintain goodwill between his two families
Jim Banks’ Estate Plan Jim Banks Estate Flows into Living Trust Makes gifts of insurance premium payments Living Trust ILIT Estate passes through Living Trust Death benefits pass federal estate tax-free Kathy and their children Children from Jim’s previous marriage
Achieving Important Goals • An estate plan for your blended family can ensure orderly and equitable distribution of assets Action Steps: • Discuss your objectives with your family • Create estate plan that addresses your unique issues and concerns
Life insurance products issued by Transamerica Occidental Life Insurance Company, Cedar Rapids, IA 52499. Transamerica Occidental Life Insurance Company (“Transamerica”) and its representatives do not give tax or legal advice. This material is provided for informational purposes only and should not be construed as tax or legal advice. Clients and other interested parties should consult with and rely solely upon their own independent advisors regarding their particular situation and the concepts presented here. Discussions of the various planning strategies and issues are based on our understanding of the applicable federal laws in effect at the time of publication. However, these laws are subject to interpretation and change, and there is no guarantee that the relevant authorities will accept Transamerica’s interpretations. Additionally, this material does not consider the impact of applicable state laws upon clients and prospects. Although care is taken in preparing this material and presenting it accurately, Transamerica disclaims any express or implied warranty as to the accuracy of any material contained herein and any liability with respect to it. This information is current as of September 2006.