Is This the Best Legacy Approach to Minimize Taxes?

There’s a good chance your clients have legacy funds just sitting in their IRAs.

Savers often plan to use their IRAs and 401(k)s for income in retirement. But many Americans have excess funds saved in these tax-deferred accounts – meaning any funds they don’t use as income, they plan to pass on to their heirs.

Saving legacy funds in a qualified account can create a very tax-sensitive inheritance. Thankfully, there’s a better approach – one that can leverage both life insurance and annuities.

Last month, I hosted a webinar diving into what we’ve found to be one of the most effective structures to minimize taxes and maximize a client’s legacy. And I want to share the recording with you so you can learn this approach, too.

I invite you to watch the recording here

In the video, I discuss:

The most effective way to identify legacy funds in your client’s IRA – as part of a Roth conversion conversation or legacy discussion
A simple way to compare IRA, Roth, and Life Insurance legacy values for your clients
Three strategy structures to meet client needs – some leveraging FIAs to drive even higher legacy values
How to properly budget for taxes and IRMAA during the conversion process

Increasing the after-tax value of your client’s legacy is why Stonewood Financial developed our Legacy Done Right software. And with OBBBA and other tax policy changes from Washington, now is the perfect time to have this conversation with your clients.

The result? Lower taxes. Bigger legacies. Stronger plans.

About the Author

Neil Wilding | COO, Stonewood Financial

Strategy expertise and training that actually moves the needle. Neil sees the big opportunities coming - and develops tools to let you take advantage of them.

An advisor was working with a prospect who was a real "do-it-yourselfer" when it came to Roth conversions. The client was converting assets up their existing tax bracket – and hadn't considered any impact to IRMAA.

With Roth Done Right, the advisor was able to show an alternate pattern that sped up the conversion to 6 years. The new structure offered $30,000 savings in conversion taxes – a 20% reduction on the prospect's conversion tax bill. The report also showed hundreds of thousands of dollars in long-term tax and IRMAA savings from the converted assets – an amount the prospect hadn't been able to quantify on his own.

Outcome

A new client with $1M in new AUM, and a $1M FIA sale to fund the conversion process.

An advisor was working with a prospect who already had assets with Ken Fisher. Fisher's team presented a 5% systematic withdrawal projection, so the advisor needed a stronger way to frame the income conversation.

Using the Annuity Alpha report, the advisor showed how an annuity could deliver over 8% in annual cash flow with lifetime income, plus a long-term care doubler. The contrast was clear enough that the prospect moved forward.

Outcome

$1.5M placed and a $100K in new business revenue.

An advisor was working with a 58-year-old couple with an established, well-funded retirement income plan, leaving an additional $3M IRA to build out a legacy for the kids. The couple's existing advisor had no real additional plan for this money, other than to keep it in their managed account and grow that money as much as possible for the kids.

Using the Legacy Done Right report, the advisor showed the need for tax planning on this $3M IRA. According to the advisor, the simple analysis "opened up the wallet" to the Roth conversion story. The advisor then used the blended Roth/Life feature in the report to show a blend of Roth Conversion assets with some Life Insurance to help maximize the client’s legacy.

Outcome

$3M in motion. The advisor picked up a $1.5M FIA sale that will be converted to Roth. And the advisor also sold a 5-Pay Protection focused IUL policy at $225,000 of premium per year.

An advisor group incorporated the Total Tax Burden report into the strategy presentation for all new prospects. They ran the tax snapshot for every new client as part of their first meeting conversation, quantifying the growing tax burden of IRA money – and illustrating the kinds of tax savings possible when working with their firm.

Starting in January of 2023, this simple analysis was presented to every single prospect who walked in the door. The goal was to differentiate their practice and drive overall revenue growth through various Roth conversion strategies.

Outcome

From 2022 to 2025, new annual AUM rose from $5M to $50M. Annual FIA sales rose from $3M to $35M. And annual life premium rose from $50K to $1M.

Is This the Best Legacy Approach to Minimize Taxes?

Neil Wilding | COO, Stonewood Financial

Real Advisors. Real Results.

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