Frequently Asked Questions!

Q. #14. What is a "life insurance trust"?

A.  Most individuals are unaware of the fact that under IRC Section 2042 the proceeds of life insurance will be attributed to the deceased owner for death tax purposes which, in many instances, results in a state or federal death tax which could otherwise have been avoided. To avoid the imposition of death taxes on life insurance proceeds, and to insure that the proceeds are properly protected for the designated recipients, a properly drafted and operated irrevocable life insurance trust should be established. The advantages of the ILIT are:

1. The proceeds will be removed from the estate of the decedent and his/her spouse.

2. It will provide additional funds for cash distributions to those selected as recipients by the creator of the ILIT.

3. The proceeds will facilitate the payment of state and/or federal death taxes which were not otherwise eliminated through the utilization of various other legal tax-avoidance strategies.

4. The ILIT will be normally be controlled by family members, excluding the Grantor, who serve as the Trustees.

Call us today for a free consultation to discuss how a properly drafted Irrevocable Life Insurance Trust could be of benefit to you and your heirs.

Let us help you protect your nest-egg.
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