InsuranceNewsNet Magazine February 2011 : Page 18
By L ind a Ko c o I S ESTATE PLANNING DEAD? More to the point, is the use of life insurance in estate planning going the way of the typewriter under the new estate tax law? And will life insurance professionals who special-ize in such planning suffer the fate of typewriter distributors? In fact, anybody witnessing the debate around the estate tax might be led to think that the fate of the entire life insurance industry rested on what has been derisively nicknamed The Death Tax. Not a chance, according to several insurance and financial experts. Life goes on and opportuni-ties always abound. This is not to say the new law won’t have an impact on life insurance. After all, estates of up to $5 million for indi-viduals and $10 million for couples will now be exempt from federal estate taxes for the next two years. Many life insurance advisors work with clients who have estates in the $2 million to $5 million range, and some of those clients will undoubtedly decide they don’t need life insurance for estate tax purposes because of those very high thresholds. Even so, the new estate tax law is not the death knell for life insurance sales, nor will it stop life insurance advi-sors from doing or facilitating estate planning, experts say. First, some background. What’s Behind the Fear? Alarmists have been warning for years about how life insurance practices would erode if Congress were to repeal the estate tax or set a very high estate tax threshold (such as the new $5 million/10 million exemptions). Some believe the ensuing decline in estate-tax-related life insurance sales would be so great that many practices would fold. The warnings have been picking up steam ever since the enactment in 2001 of the Economic Growth and Tax Relief Reconciliation Act (EGTRRA). 18 InsuranceNewsNet Magazine February 2011
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