Life Insurance And Estate Tax Planning

Life insurance and estate tax planning are good tools to protect your assets and properties. Your assets allow you and your family to live the kind of life you are living right now. Planning for the estate tax helps you pass your assets - part of your estate upon death - to your heirs instead of to the government.

Without planning, the government can get more than 20% of your total estate through estate tax. You can get an idea on the amount of estate tax by doing an inventory of your assets and properties - be it personal, real estate, insurance or business interest.

The estate tax is a percentage of the net estate. In the Philippines, the gross estate is allowed certain deductions such as
- funeral expense or 5% of gross estate whichever is lower but not to exceed P200,000
- your family home
- standard deduction equivalent to P1M
- medical expenses not to exceed P500,000
- other deductions

The best way to get cash for the tax is through life insurance. And estate tax planning requires you know how much your heirs need and where they will get it when the time comes.

Life insurnace provides guaranteed cash at a very affordable rate. Proceeds are tax-free in case of adult irrevocable beneficiaries. The proceeds will not be included in your estate so the BIR cannot go after it. Estate tax is paid without your heir shelling out money from your estate or their income.

There are different types of life insurance policies to suit your needs. An agent can advise you on the right plan. The idea is to have a ready fund equivalent to the amount of the estate tax. You pay a little now and spare your heirs from worrying where to get the money for the estate tax.

Life insurance and estate tax planning will allow your family to keep their standard of living. These tools allow your heirs to keep your hard-earned assets. Isn't it great that you will be taking care of them long after you are gone?

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