years. If they wait until the husband and wife die, the children could easily pay 30 or 40 percent of that $370,000, which would be $110,000 to $148,000 lost. And, if this couple reallocated the money from $370,000, which would be $31,900 in taxes, into a cash value life insurance policy, they could transform $370,000 of forever taxed money into never taxed money that could be used any way they choose without income tax liability. Wouldn’t it be wise if that would be worth paying less than $33,000 while you are alive to eliminate the income tax forever? Would it be worth it? I tell you the strategy of reallocating to a cash-value life insurance policy, wouldn’t the leveraged death benefit reimburse the family for the $33,000 in income taxes paid while alive? Doesn’t that mean that if they paid one cent of tax out of their own pocket to reallocate the $370,000 of fully taxable money they started with? If you are not going, WOW! I wouldn’t know how to make it any better. However, we can make it better. That money can now be used more effectively to offset inflation and provide critical illness and long-term care benefits. It can be used to provide a tax-free income stream for as long as they live. If set up correctly, it doesn’t have to go through probate. It is incontestable and private. It can be controlled from the grave. It has creditor and predator protection, and finally, it has Medicaid versatility. The strategy covers a lot of bases. Third Example: Please use your imagination. Whatever your income is, if it is lower than $112,000, you can make this strategy work. If you live on $50,000 per year, you can reallocate up to $62,000 per year without a large income tax liability. The income tax on the $62,000 would be $5,394 or 8.7 percent. Ask yourself if you should pay that amount now and eliminate the tax on that money forever or should you wait until you die and have the government take 30 or 40 percent of whatever the entire amount is? Let’s go to the other way. If this couple lives on $90,000 or $100,000, you still can take advantage of the rule of 112-12. In the three examples given this couple would still be able to reallocate $22,000 to $17,000 per year. By reallocating this money, they could leverage the income tax liability
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