8. Leverage life insurance.
Don’t forget life insurance as an income tool. Permanent insurance has many uses for clients hoping to save on taxes: It can be used inside a trust to save on estate taxes. But outside of a trust, it’s a handy vehicle for tax-deferred growth and clients can tap the cash value of the policy while they’re alive for tax-free income. “Life insurance is a good tax shelter,” said Mr. Keebler. “We look at it as an income bucket.”
Note, however, that those withdrawals will reduce the client’s death benefit. Advisers should also be aware of the health of clients’ policies and ensure that those withdrawals are sustainable and don’t lead to a busted policy and a heavy tax bill.