The MPI Plan enables you to purchase a life insurance policy on yourself to create a tax free retirement income and a death benefit for your beneficiaries. However, without a Legacy Trust owning the plan, there are significant limitations, such as:
- Typically you are unable to purchase a MPI Plan on the life of someone other than your spouse or child.
- When you purchase a MPI Plan on the life of your spouse, child, or anyone else, they own the policy – not you. This means your child may withdraw the income and principal from the MPI Plan and you are not entitled to the income or assets.
- Upon your death, the death benefit of your MPI Plan pays out to the named beneficiary. The beneficiary may then do whatever they wish with the death benefit.
- Although life insurance proceeds are typically protected from your beneficiary’s creditors upon their initial receipt, the funds become subject to the beneficiary’s creditors, lawsuits and bankruptcy. The proceeds can also disqualify the beneficiary from government aid programs and become subject to a beneficiary’s divorce.
- The cash value of the MPI Plan will count towards your Federal Estate Tax exemption amount. Everything you own that exceeds the Federal Estate Tax exemption amount will be assessed an estate tax. Currently the estate tax rate is 40%. In other words, your house, bank accounts, vehicles, MPI Plan and everything else you own when you die will currently be taxed if it exceeds the Federal Estate Tax exemption amount. This amount is currently at $11.7 million in 2021. However, not only will this amount decrease to $5 million in 2026, President-elect Joe Biden proposes to lower this further to $3.5 million per person.
- Upon your death, your beneficiary may spend the MPI Plan’s proceeds and death benefit any way he or she wishes. In other words, what you have worked hard to create may end in the next generation. There is no guarantee that future generations will further invest in MPI Plans.
Suncor Financial provides its clients with exclusive access to the Legacy Trust created by attorney W. John Skabelund at Davis Miles McGuire Gardner, PLLC (“DMMG”). DMMG is the 6th largest law firm in Arizona. Award winning attorney, John Skabelund, has created a revolutionary trust for MPI Plans called the Legacy Trust. Mr. Skabelund is not only an experienced estate planning attorney, he too is a Suncor Financial client with his own MPI Plan and Legacy Trust.
Suncor Financial is proud to introduce the Legacy Trust to enable its clients to maintain control and protect their MPI Plan after death. The Legacy Trust continues to manage the MPI Plan by someone you designate. Your MPI Plan can continue blessing generations rather than ending when you die.