The Legacy Strategy that Passes Greater Values


Many times, your clients will say they wish to leave a legacy or inheritance to their children or grandchildren. Usually, they think of this as a lump sum of cash or certain personal items. But what about a steady income? You could help them create a longer, and potentially more fulfilling legacy with a joint income annuity.


We’ve had successful results with this concept. Usually, clients want to leave a certain amount of money to their beneficiaries. However, before they pass and give away their remaining assets, they’re going to need a certain amount of income. This strategy solves both challenges.


In this situation, the older client elects to purchase a single-premium immediate annuity and make a child or grandchild a joint annuitant. There are a few advantages to purchasing an annuity in this manner:


  1. The older client enjoys an income guaranteed for life
  2. Income is received with an exclusion ratio, so most of the income is received tax-free
  3. When the older client passes away, the joint annuitant continues to receive the income for the rest of their life
  4. If a cost-of-living rider is attached, the joint annuitant enjoys potentially guaranteed step-ups in income for the rest of their life


Greater Values

This is already a unique strategy to legacy planning, but I encourage clients to take this one step further. I ask them to write letters to their child or grandchild, passing along memories, advice and family values. Along with the funds from the annuity, these letters can be sent at certain life milestones:

  • 16th birthday
  • High school graduation
  • Wedding day
  • Birth of first child 

In these letters, the parent or grandparent can share their wisdom – struggles as a teen, joy in marriage, the challenges of raising a family, etc. These letters are what will make a difference to beneficiaries. The transaction is more than an economic benefit. It becomes an inheritance of a legacy.


Winning Strategy

When it comes to wealth transfer, we tend to think about life insurance or beneficiary designations. Think outside the box to transfer wealth that includes value – family values.

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About the Author

Mike McGlothlin is a team leader, retirement industry activist and disciple of Indiana Hoosier basketball. In addition to being EVP of retirement at Ash Brokerage, he is a sought-after writer and speaker. His web series, “Winning Strategies,” provides insight and motivation for financial advisors in many forms – blogs, books, videos, podcasts and more. You can get his latest book, “Winning Strategies: The New Rules of Retirement Planning,”  on Amazon.

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The Immeasurable Return on Family Values


While we’ve had our eyes on the U.S. Department of Labor’s Fiduciary Rule and Conflicts of Interest Rule, Congress has recommended some new tax laws that might adversely affect the American consumer even more so. 


A proposed bill would limit the amount of retirement funds that might be stretched to the next generation or the following generation. The proposal limits the amount a retirement investor can stretch to only $250,000. 


This is where you should look at different angles and new ways to attack the problem. Many annuities allow for joint, non-spousal annuitants. The advantage of this set-up is that both annuitants get income for both their lives. This allows annuities to be a vehicle that creates a “stretch-like” provision above the $250,000 of assets under management. 


More than Money

How would your clients and beneficiaries react to being able to do the following?

  • Grandparent receives an income on an asset for the rest of their life – guaranteed – with a cost of living increase each year
  • When the grandparent passes away, the grandchild receives the same income – guaranteed for their life – with a cost of living increase each year
  • On the grandchild’s 16th birthday, the planning firm sends a check plus a note from the grandparent about how special the “Sweet 16” is and to enjoy their teen years
  • On the grandchild’s 21st birthday, the planning firm sends a larger check plus a note from the grandparent about how important family values are as an adult – the grandparent writes about the fears they had when they were 21 and how they succeeded
  • When the grandchild weds, the newlyweds get a letter from the grandparent about the secrets to a 50-year marriage, and reaffirms the family values that helped them weather the storms
  • When the couple has their first child, a letter arrives talking about how challenging parenting will be, but the rewards of raising a child far outweigh the early mornings, teething, potty-training, and other heartaches in raising a child. The letter reassures them everyone has been there and, if they stick to the family values, their child will be successful, healthy and wealthy. 
  • And so on…and so on…


In these cases, the return on money becomes irrelevant. You are not helping your clients pass along just tax savings or a better return; you are perpetuating value that is important – their family values. 


Winning Strategy

Talk to your clients who have grandchildren. Show them how they could create a stretch provision that is not dictated by tax law. Instead, it is driven by their family values – I think they will find the idea more valuable than any return you could provide. And, it will likely give the family even more than you can ever provide through asset allocation. 


About the Author

Mike McGlothlin is a tireless advocate for the retirement planning industry. As executive vice president of retirement at Ash Brokerage, he heads a team providing income planning solutions focused on longevity and efficiency. He’s also a thought leader who provides guidance and assistance for advisors and broker-dealers navigating marketplace and regulatory changes. You can find a collection of his blog posts in his book, “Above the Clouds … Winning Strategies from 30,000 Feet.”

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