Life Insurance has “most favored tax” with Congress. No other investments provides the benefit that life insurance provides. As a matter of policy, Congress has decided that life insurance is critical to protecting America’s families. Irrevocable Life Insurance Trusts helps by:
- Avoids Inclusion of Life Insurance Proceeds in Insured’s Gross Estate The goal of an ILIT is to remove the life insurance proceeds from the insured’s gross estate for federal estate tax purposes.
- No Gift Taxes A Crummey withdrawal right granted to each beneficiary, when used in conjunction with the gift tax annual exclusion amount under IRC §2503(b) and gift splitting under IRC §2513, allows the grantor’s payment of premiums to be gift tax free.
- Remove Policy from Gross Estate The transfer of an existing life insurance policy to an ILIT can generally be accomplished with little or no gift tax having to be paid due to the fact that the gift tax value of an existing life insurance policy is a fraction of the death benefit
- Control The transfer of a Life Insurance Policy to an ILIT gives the insured more control over the policy than if it were gifted outright
- Liquidity If the Life Insurance proceeds are needed t provide liquidity to the insured’s estate, the trustee can be authorized to buy assets from the insured’s estate or loan funds to the estate.
Published by Belaw.net, providing high level of representation in issues of real estate, corporate, banking, government and commercial law. Florida attorney Jeffrey L. Baxter have helped hundreds of clients resolve their issues with integrity and professionalism. We are confident we can help you too, contact us now for a complimentary, no obligation consultation.
