Simplify Your Life After the New Tax Act and Terminate that Irrevocable Life Insurance Trust

Matt Schwartz Blog Photo

Is It Time to Terminate Your Life Insurance Trust?

As a result of the Tax Cuts and Jobs Act of 2017, the federal estate tax exemption is now $11,180,000 per person and $22,360,000 per married couple. How many of you purchased life insurance in a trust in the last 15-20 years when the federal estate tax exemption was $600,000 or even at $2,000,000? If you fall into that category, then you are like me. As the federal estate tax exemption has increased, I started asking myself; ‘Why am I going through all of this work to maintain the insurance trust? Especially since the insurance proceeds would not cause any taxation in my estate, because of the high federal estate tax exemption.’ In addition, I realized that I was inconveniencing my sister as Trustee by asking her to deposit my check for the premium into the insurance trust and then write a check from the trust to the insurance company to pay the policy as well as preparing the Crummey withdrawal notices.

How Does The Process of Paying My Insurance Premiums Change?

A few years ago, I became aware of an opportunity under the Pennsylvania Uniform Trust Act, either to modify or to terminate, an insurance trust without court approval. I decided to utilize this opportunity to terminate my life insurance trust and return the ownership of my life insurance to myself so that I had full autonomy over the life insurance and did not have to inconvenience my sister anymore. It was also crucial that I have full trust in my wife, Beth, of over 20 years and knew that she would make sure that our wishes were honored with the life insurance proceeds if she survives me. So, my insurance premium payments are much simpler each year without the involvement of the insurance trust.

Am I Able To Help You With Your Needs?

As I started to share this story with my clients, they became interested in this idea as well. Please do not hesitate to send me an email or give me a call at 412-521-2732 x211 if you are interested in terminating your insurance trust and making your life simpler.

Contact Matt Schwartz, Attorney at the Lange Financial Group for Estate Planning needs including Wills.

Using Gifting and Life Insurance as a Solution to the Death of the Stretch IRA

How to Use Gifting and Life Insurance as possible solutions to the Death of the Stretch IRA

Using Gifting as a Soltion for Death of the Stretch IRA James Lange

This post is the ninth in a series about the Death of the Stretch IRA.  If you’re a new visitor to my blog, this post might not make much sense unless you read the preceding posts, which spell out the specifics of the proposed legislation that might cost your family a lot of money.  This post discusses some ways that you can use gifting and life insurance as a possible solution to the Death of the Stretch IRA.

If you’ve been following my previous posts, you know that the Death of the Stretch IRA legislation could spell devastating tax consequences for your beneficiaries (other than your spouse, who is considered exempt).  Strategic planning to minimize those taxes will become very important once this legislation is finalized.  And while the techniques that follow are not for everyone, they can be beneficial for people who are in a position to take advantage of them.

What is a Gift?

When estate planners talk about gifts, they’re not talking about the presents you exchange on birthdays and holidays.  Generally, they’re referring to gifts of assets – cash, investments, etc. – that, when transferred to someone else, can reduce your current tax bill and, ultimately, the tax that your beneficiaries will pay after you die.  Current IRS rules allow you to gift a maximum $14,000 every year, tax-free, to each of your children.  Your spouse can also gift $14,000 to each child and, if you wanted to, both of you could also gift $14,000 to your child’s spouse.  Let’s say that you have three children, and they’re all married.  This means that you and your spouse could gift $56,000 to each of their families, tax free.  It also means that you’ve just reduced the size of your own taxable estate by $168,000.  Gifting can help reduce the amount of income tax that you owe now, and can be an effective solution to help manage the taxes that will be due at your death.

Maximizing the Tax Benefits of your Gift

But why not maximize the value of your gift by making it tax-efficient for the beneficiary too?  One idea would be to fund a Roth IRA for each child.  Roth IRAs are not tax-deductible, but the future earnings on the account are, under current law, completely tax-free.  A gift of a $5,500 Roth IRA to a 25-year old could make a significant difference in his standard of living when he retires.

If you have grandchildren who are of school age, a gift of a college savings plan could be an excellent tax-savings strategy.  While the contributions to a Section 529 plan are not deductible on your own federal tax return, the withdrawals are tax-free as long as the proceeds are used for qualifying expenses incurred by a student who is enrolled at a qualifying institution.

But what happens if your family situation is such that, even if you gift the maximum amount legally possible to all of your beneficiaries, taxes will still be a concern after your death?  In that case, you may want to consider life insurance as a possible solution.

Using Life Insurance as a Solution for Problems After Your Death

I don’t recommend life insurance just so that your heirs will receive even more money when you die.  Rather, I recommend it so that your heirs, and not the government, will get the money you’re leaving behind.  Here’s why.  Monthly payments such as pensions, annuities and Social Security that you rely on for cash flow, will likely change (if your spouse survives you) or stop completely when you die.  Your bills, though, will keep coming until they’re settled by your executor.  Many of these bills will be caused by taxes.  Your executor will have to file an income tax return on April 15th, and estate and inheritance taxes are generally due nine months after you die.  If your assets are not liquid by nature (for example, if you own real estate or a family business), or if you owned investments that happened to have declined in value at the time of your death, life insurance can provide sufficient cash to pay those taxes.  Without it, your heirs may be forced to liquidate your assets for far less than what they are worth.  The proceeds from life insurance, if it’s set up properly, are free of state and federal estate, inheritance and transfer taxes.

Remember, life insurance is a gift – and if you can’t afford to give your children a cash gift, then it isn’t likely that you can afford to give them a gift of life insurance either.  If you can afford to give them a gift, though, then life insurance is an option that you might want to consider.

Gifting and the Death of the Stretch IRA

When the Death of the Stretch IRA legislation is finalized, gifting (and especially life insurance) will likely become even more effective solutions than they have been in the past.  Please stop back soon, because my next post will go into the details!


For more information on this topic, please visit our Death of the Stretch IRA resource.


P.S. Did you miss a video blog post?  Here are the past video blog posts in this video series.

Will New Rules for Inherited IRAs Mean the Death of the Stretch IRA?

Are There Any Exceptions to the Death of the Stretch IRA Legislation?

How will your Required Minimum Distributions Work After the Death of the Stretch IRA Legislation?

Can a Charitable Remainder Unitrust (CRUT) Protect your Heirs from the Death of the Stretch IRA?

What Should You Be Doing Now to Protect your Heirs from the Death of the Stretch IRA?

How Does The New DOL Fiduciary Rule Affect You?

Why is the Death of the Stretch IRA legislation likely to pass?

The Exclusions for the Death of the Stretch IRA

Using Gifting and Life Insurance as a Solution to the Death of the Stretch IRA

Using Roth Conversions as a Possible Solution for Death of the Stretch IRA

How Lange’s Cascading Beneficiary Plan can help protect your family against the Death of the Stretch IRA

How Flexible Estate Planning Can be a Solution for Death of the Stretch IRA

4 Reasons Why We’re Excited that Retire Secure! is Interactive on the Web!

If you haven’t made your way to yet, now is the time!

Here at the Lange Financial Group, LLC, we are very excited to bring you an interactive version of Retire Secure! A Guide to Getting the Most Out of What You’ve Got.

Reason #1 – The entire book is on this website. Yes, all 420 pages of the book, including the front and back covers, all about the best strategies for retirement and estate planning.


Reason #2 – The book is divided into chapters for ease of reading. Meaning, you don’t have to flip through 400-some pages to get to Chapter 11 – The Best Ways to Transfer Wealth and Cut Taxes for the Next Generation.


Reason #3 – We honestly haven’t seen anything like this before. Granted, I’ve read magazines on viewers where you can flip the pages as you read. But not a website for a book that includes a viewer, as well as a forum where readers can engage with each other.

The comments are moderated by the Lange Financial Group, LLC staff and myself. One of us will reply to your comment as soon as we can. To leave a comment, all you need to do is connect with your Amazon, Facebook, or LinkedIn account. This measure is for your protection, as well as ours. We don’t want spammers posting comments or incorrect information about such an important topic.


Reason #4 – We are hoping this interactive website encourages you to purchase the book! Retire Secure! is available from Amazon and Once you’ve read the book, feel free to return to to ask questions, as well as Amazon and Goodreads to review the book for the benefit of others.


Life Insurance: Is It Right for Your Estate Plan?

Insurance salesmen are often maligned and are frequently the butt of some pretty bad jokes. At the risk of being categorized with those poor men and women, I’ll tell you that I don’t hesitate to recommend life insurance to many of my own clients after evaluating their estate planning needs. Why? Because when it is appropriate and structured properly, life insurance has a number of benefits that make it an excellent and possibly the best wealth transfer strategy.

If you read the earlier chapters, you learned that legislative changes since 2009 mean that federal estate tax is an issue for far fewer taxpayers than in the past. The IRS wasn’t feeling guilty about charging estate tax on your assets, they just gave more people a reason to worry about a completely different problem called federal income tax. Chapter 12 of Retire Secure! delves into some techniques that show how life insurance can be used to help minimize the damage to the estate caused by income taxes at death. It also discusses how life insurance can be used to provide liquidity for a number of estate settlement needs, and also how it can be used to benefit the estate if there is a disabled beneficiary. While life insurance can be extremely beneficial it is important to remember that in situations where taxes and other estate needs aren’t a concern, the cost of the life insurance – especially for a senior citizen – might not be worth it.
Life Insurance, Retire Secure, James Lange

In earlier chapters, there are several references to the possibility that Congress may eliminate the benefits of the Stretch IRA. Chapter 12 introduces some new ideas regarding the inclusion of a Charitable Remainder Unitrust (CRUT) in certain estate plans. How do you think your children would react if you named a charitable trust as the sole beneficiary of your retirement plan? They might react very favorably when they find out that, in the long run, they could end up with a lot more money.

This is a very complicated estate planning technique that is not appropriate for everyone. Under the right set of circumstances, though, life insurance can be a very effective addition to an estate plan – especially if the owner of the IRA has always supported charities. Would you like to endow a chair at your local university or symphony orchestra, or perhaps provide financial support for your favorite hospital or religious organization long after your death? Read Chapter 12 to learn the basics of this strategy, and how life insurance can play a key role.

Stop back soon for an update on some really big news about the possible death of the Stretch IRA.


Jim Lange, Retirement and Estate Planning A nationally recognized IRA, Roth IRA conversion, and 401(k) expert, he is a regular speaker to both consumers and professional organizations. Jim is the creator of the Lange Cascading Beneficiary Plan™, a benchmark in retirement planning with the flexibility and control it offers the surviving spouse, and the founder of The Roth IRA Institute, created to train and educate financial advisors.

Jim’s strategies have been endorsed by The Wall Street Journal (33 times), Newsweek, Money Magazine, Smart Money, Reader’s Digest, Bottom Line, and Kiplinger’s. His articles have appeared in Bottom Line, Trusts and Estates Magazine, Financial Planning, The Tax Adviser, Journal of Retirement Planning, and The Pennsylvania Lawyer magazine.

Jim is the best-selling author of Retire Secure! (Wiley, 2006 and 2009), endorsed by Charles Schwab, Larry King, Ed Slott, Jane Bryant Quinn, Roger Ibbotson and The Roth Revolution, Pay Taxes Once and Never Again endorsed by Ed Slott, Natalie Choate and Bob Keebler.

If you’d like to be reminded as to when the book is coming out please fill out the form below.


The Third Edition of Retire Secure! is almost complete!

Retire Secure! Third Edition, A Guide To Making The Most Out Of What You've Got, James LangeThe Third Edition of Retire Secure! is almost complete!

We are tying up loose ends on Retire Secure!: A Guide to Making the Most Out of What You’ve Got, which will have all the tables and charts updated with current numbers, and will include new information, some of which we have outlined below. We expect to have the book printed by spring 2015.

The Third Edition of Retire Secure! will offer updated numbers for all of the advice and planning in our earlier editions, plus:

  • New Taxes Aimed at High-Income Taxpayers
  • Changes in Capital Gains Tax Rates Create New Opportunities
  • Income Taxes Are Now More Important Than Estate Taxes for Most People
  • The Death of the Stretch IRA
  • Proposed Required Minimum Distributions on Roth IRAs
  • Roth IRA Conversions Can Still Be a Good Idea

We look forward to continuing to offer all our clients and prospective clients what we believe is some of the most solidly researched and analyzed information on retirement and estate planning.

Jim LangeA nationally recognized IRA, Roth IRA conversion, and 401(k) expert, he is a regular speaker to both consumers and professional organizations. Jim is the creator of the Lange Cascading Beneficiary Plan™, a benchmark in retirement planning with the flexibility and control it offers the surviving spouse, and the founder of The Roth IRA Institute, created to train ad educate financial advisors.

Jim’s strategies have been endorsed by The Wall Street Journal (33 times), Newsweek, Money Magazine, Smart Money, Reader’s Digest, Bottom Line, and Kiplinger’s. His articles have appeared in Bottom Line, Trusts and Estates Magazine, Financial Planning, The Tax Adviser, Journal of Retirement Planning, and The Pennsylvania Lawyer magazine.

Jim is the best-selling author of Retire Secure! (Wiley, 2006 and 2009), endorsed by Charles Schwab, Larry King, Ed Slott, Jane Bryant Quinn, Roger Ibbotson and The Roth Revolution, Pay Taxes Once and Never Again endorsed by Ed Slott, Natalie Choate and Bob Keebler.

If you’d like to be reminded as to when the book is coming out. Please fill out the form below.


Back Door IRA, The Conclusion


Disclaimer: Please note that the Tax Cuts and Jobs Act of 2017 removed the ability for taxpayers to do any “recharacterizations” of Roth IRA conversions after 12/31/2017. The material below was created and published prior the passage of the Tax Cuts and Jobs Act of 2017. 

Converting to a Roth IRA also comes with another very unique advantage. The IRS allows you a one-time opportunity to recharacterize or “undo” this conversion by October 15th of the following tax year. IRS publication 590 states that, “a recharacterization allows you to ‘undo’ or ‘reverse’ a rollover or conversion to a Roth IRA. To recharacterize, you generally instruct the trustee of the financial institution holding your Roth IRA to transfer the amount back to a traditional IRA (in a trustee-to-trustee or within the same trustee). If you do this by the due date for your tax return (including extensions), you can treat the contribution as made to the traditional IRA for that year (effectively ignoring the Roth IRA contribution)”. In the case of a Backdoor Roth IRA, you probably won’t think about recharacterizing. However, if you want to explore this option, we are here to help assist you, because like many of the other rules involved this can be complicated.


While Backdoor Roth IRAs can be beneficial to many investors, they aren’t for everyone. They come with their limitations and complications. There are precautions that need to be taken to reap the full benefits of any financial decision. This is an area where a highly informed financial advisor can help you make an educated and calculated decision. You should always consult with your financial advisor and tax professional to help avoid tax ramifications.

As always, we are here to help and can look at your specific financial situation and chart the right path for you. If you are interested in learning more about whether or not a Backdoor Roth would be right for you and your specific situation, please call us and we would be happy to discuss this with you. As always, we enjoy the opportunity to assist you in addressing your financial matters.

Financial Check-Up


Complimentary Financial Check-up

If you are currently not a client of The Lange Financial Group, we would like to offer you a complimentary, one-hour, private consultation with one of our professionals at absolutely no cost or obligation to you.

To schedule your financial check-up, please call 412-521-2732 or fill out our Pre-Qualification Form here.

Thank you,
James Lange



This article is for informational purposes only. This information is not intended to be a substitute for specific individualized tax, legal or investment planning advice as individual situations will vary. For specific advice about your situation, please consult with a lawyer or financial professional.

The Roth IRA offers tax deferral on any earnings in the account. Withdrawals from the account may be tax free, as long as they are considered qualified. Limitations and restrictions may apply. Withdrawals prior to age 59 ½ may result in a 10% IRS penalty tax. Future tax laws can change at any time and may impact the benefits of Roth IRAs. Their tax treatment may change.

Roth IRA account owners should consider the potential tax ramifications, age and contribution deductibility limits in regard to executing a re-characterization of a Roth IRA to a Traditional IRA.

The views stated in this letter are not necessarily the opinion of The Lange Financial Group, LLC, and should not be construed, directly or indirectly, as an offer to buy or sell any securities mentioned herein. Investors should be aware that there are risks inherent in all investments, such as fluctuations in investment principal. With any investment vehicle, past performance is not a guarantee of future results. Material discussed herewith is meant for general illustration and/or informational purposes only, please note that individual situations can vary. Therefore, the information should be relied upon when coordinated with individual professional advice. This material contains forward looking statements and projections. There are no guarantees that these results will be achieved. © Academy of Preferred Financial Advisors, 2014


Time is running out to lock in low rates on insurance premiums.

The January 1, 2013 deadline is approaching fast and we are already seeing changes being made to permanent policy rates.  Revisions to actuarial guideline 38 are going to cause many premiums to skyrocket.  For more information visit our site and check out all the resources we have available on insurance in the middle of the page.  We have had radio shows on the topic, and there is currently a transcript and mp3 available for download.  We also have posted an open letter to our clients and friends regarding this important issue, (which can be found directly at:

Take some time today to read and evaluate this information and then call us for a complimentary insurance review.  412-521-2732

Life Insurance Premiums to Increase on Many Guaranteed Policies…

Life insurance often plays an important role as one component of an overall retirement and estate plan. A new development in the world of insurance commands our attention.  Insurance premiums on many permanent policies are going up and many plans will never be available at current rates again.

Interest rates have dropped over the last decade and remain stagnant today. This has caused chaos in conservative investment vehicles including bonds, fixed annuities, money market accounts, and certificates of deposit. Now, these lower interest rates are going to drastically affect life insurance product design pricing for many guaranteed life insurance products. The National Association of Insurance Commissioners (NAIC) has seen the need to make adjustments in the way that life insurance companies finance and carry reserves on their policies. In September, the NAIC approved revisions to Actuarial Guideline 38 (AG38) requiring insurance companies to hold more cash reserves in order to guarantee many life insurance policies.

Some insurance companies have already begun changing their policies, but certainly by January 1, 2013, we are going to see a dramatic change in product design and the pricing of life insurance in this country. The most common increase in pricing for guaranteed policies is projected to be between 8 and 15 percent, however, industry wide, the premium increases are going to peak as high as 25 percent.

Life insurance is more than just a death benefit.  It is the only vehicle ever fashioned that creates an instant estate. Life insurance can ease the worry of outliving your resources, help fund a college education, bolster retirement prospects, help you maximize your social security or required minimum distributions, pay for estate and income taxes, and, in some cases, a combination policy can provide for long-term care coverage as well as life insurance.

If you are unsure if you need life insurance, or you’d like to get information about how life insurance can augment your portfolio and improve your loved ones, beneficiaries’, and even your own financial future, now is the time to find out more.

Please, call us today and schedule a complimentary appointment to evaluate and discuss your insurance needs taking into account whatever insurance you already own.  You won’t be sorry.

Please call Alice, at 412.521.2732 to set up your free insurance evaluation today.

Life Insurance Awareness Month

Life insurance isn’t a big part of what we do here at Lange Financial, but it is an important part. As September is Life Insurance Awareness Month, we want to share some important life insurance facts with you all.

Did you know that depending on the size of your estate, your heirs could be hit with a large estate tax payment after you die. The proceeds of a life insurance policy are payable immediately, allowing heirs to take care of estate taxes, funeral costs, and other debts without having to hastily liquidate other assets. And life insurance proceeds are generally income tax free and can be arranged to avoid probate. Finally, if your insurance program is properly structured, the proceeds from your life insurance policy won’t add to your estate tax liability.

Think it over. If you are one of the 35 million American households that are uninsured, you might want to consider what a life insurance policy could mean for your heirs.

Five Financial Tips for Women

Five Financial Tips for Women

  1. Make it a Priority to Understand What You Already Have – For working woman, make sure you fully understand your employee benefits and your company’s retirement plan.  Make it a point to see what your short and long term disability and life insurance can offer you and then fill in the gaps with individual policies. You may be surprised what your benefits do and do not cover.  It’s better to know now then at the time you may need to use them.
  2. Fund Your Retirement Plan:  Most employers offer employees a retirement plan and you must take advantage of it. Make sure though that you consult with a qualified financial advisor when choosing your fund choices.  Leave the selection up to the professionals and review it once a year to make sure your maximizing your returns. Beyond your company’s retirement plan, look into getting your own IRA or Roth IRA, which allows you grow wealth tax-free through the course of your lifetime – it’s worth looking in to.
  3. Recognizing the Challenges is Half the Battle: There’s no doubt about it – women face obstacles that men do not.  Women still earn less than their male counterparts, live longer and are typically out of the workforce for 12 years, on average, taking care of children and now more than ever, aging parents. Recognize these challenges, set goals and build a plan to action to overcome your specific hurdles.  Things such as making a career move or initiating salary negotiations, refinancing your mortgage, opening up an IRA or Roth IRA and adjusting your risk tolerance on your investments can all make a powerful impact on your financial picture.
  4. Don’t be Afraid to Fire a Bad Advisor:  Let’s face it, there are thousands of financial advisors out there…some of which may suit you better than others.  Choosing a financial advisor is like choosing a doctor.  Choose a person who focuses on your needs and not there’s, someone who listens to your goals, keeps you on track and meets with you at least once a year to review your situation.  If you’re not satisfied with the relationship you have, move on!
  5. It’s Never Too Late:  Regardless of your age, there are ideas and options that can help your financial picture – we see it everyday.  There is no better time to start investing than right now. Make it a priority to meet with an advisor in 2011.  Ask people you trust to refer you to someone that listens and achieves results and get started as soon as possible.