Estate and Retirement Strategies

Throughout your entire career you’ve worked hard for your family. At UFIS, our primary goal is the success and financial stability of our clients. Making sure you have a plan in place when you pass on is crucial to that stability. Through estate and retirement strategies we can help you achieve this goal. We can help reduce the costs of your estate and help you receive an income stream you cannot outlive.

12 Retirement Risks

  1. Longevity Risk – risk of outliving sustainable income
  2. Entitlement Risk – risk the gov’t programs (SS/Medicare)
    will not provide sufficient retirement income
  3. Excess Withdrawal Risk – risk of drawing down assets too quickly
  4. Market Risk – risk of losing retirement assets due to market downturn or poor performance
  5. Lifestyle Risk – risk there will not be sufficient income to maintain current or suspected standard of living
  6. Asset Allocation Risk – risk of investing either too conservatively
    or aggressively and not diversifying assets
  7. Sequences of Returns Risk – risk of receiving low or negative returns in early years and diminishing retirement portfolio
  8. Inflation Risk – risk that rising costs will undermine purchasing power of retirement assets
  9. Medical Expense Risk – risk of paying for the growing costs of health care related services in retirement
  10. Tax Risk – risk that rising taxes or unforeseen taxes can have on portfolio purchasing power
  11. Personal or Event Risk – risk that unexpected change in family circumstances may undermine anticipated retirement plans
  12. Incapacity Risk – risk that as a result of deteriorating health, a retiree may not be able to execute sound judgment in managing retirement affairs

Source: 2011 Insured Retirement Institute Fact Book, pg 127-128


Family Protection Family Limited Partnerships

Rob Boland, our attorney at UFIS, is the designer of all family protection family limited partnerships. You need a good tax attorney and trust attorney, and Rob is there to help you every step of the way. It could cost you more money if not set up correctly.


Buy-Sell & Captive Insurance Companies

This is a new and up-and-coming area in the financial arena. At UFIS, we value the ability to provide you with the right information to succeed. We have extensive experience in helping clients in this new area and providing them the proper tools to succeed.

Spousal Limited Access Trust

A Spousal Limited Access Trust (SLAT) is a special ILIT that allows the grantor’s spouse to receive limited access to distributions from the trust during his or her lifetime. A SLAT can help your spouse cover unforeseen future expenses, and allows you to provide distributions to your beneficiaries. At UFIS, we demonstrate our commitment to you by offering you flexible protection in the insurance industry.

162 Executive Bonus

Bonuses represent an incentive-based form of compensation that can be very effective because of the close connection between performance and delivery of the reward. Bonuses can be used for a number of purposes, such as assisting an executive in the purchase of a life insurance policy, and allow flexibility in compensation to reflect company performance. Small business owners can take a loan from their corporation in a 162 format and put it into a life contract, hence the reduction of income to their LLC. However, as a loan, there would be limited taxes on the small business owner. Employers can use bonus plans whenever they want to attract, motivate, and retain key employees. Employers can also keep the money tax-free which helps to reduce income taxes. Thus, both the employer and the employee can reap the benefits of outstanding performance. Bonuses allow owners and employers to put the money in a life insurance contract and with the option to withdraw money.

Bonuses are generally deductible by an employer according to the same rules as other forms of cash compensation. If the policy is built correctly, then it is a viable alternative to Roth accounts, 401(k)s, etc.

Section 162 of the Internal Revenue Code states that an employer may deduct certain expenses-including salary and other compensation-that are considered ordinary and necessary business expenses. Certain nonqualified plans contained within Section 162 can be referred to as executive bonus plans or Section 162 plans.

If structured correctly, some of the biggest advantages are:

  • Ease of implementation and easy to administer
  • Business owner can be selective in choosing its key-man employees
  • Bonus payments can be tax deductible event to the company
  • The key-man employee chooses their beneficiary
  • Qualified plan limits not applicable
  • Ability to access policy cash value and possibility to access cash value without income tax through policy loans and withdrawals

Before implementing a plan covered by Section 162, be sure to discuss with your advisor these factors:

  • The business inability to fully recover its costs from the policy’s death benefit since the key executive names the policy beneficiary.
  • The business’ control over the policy’s cash value after it is issued.
  • The business’ ability to recover the bonus should an employee leave.
  • The inclusion of the bonus in the executive’s taxable income.
  • Possibility of the policy’s death benefit being included in the key executive’s taxable estate.

Defined Benefit Plans, Retirement Plans, and Other Profit Sharing Plans

Qualified plan dollars can purchase life insurance policies.

The principle reason for purchasing life insurance through a plan, rather than as an individual expenditure by the participant, is that premium payments then become tax deductible (as employer contributions to a plan). The IRS puts restrictions on these purchases, stating the insurance can only be “incidental” to the plan benefits, limiting the amount of insurance a plan may purchase. When the qualified retirement plan purchases life insurance on behalf of a participant, the participant must currently include (in income) the value of the “deemed premium” on such insurance.