Irrevocable Life Insurance Trusts, or ILITs, have long been a staple of estate planning, helping individuals, families and business owners meet a wide range of goals. After all, the logic goes, with more of your money now shielded from federal estate taxes, you may no longer need to worry about having to pay estate taxes on your insurance payouts.
In exchange for moving your life insurance policy into the trust, an ILIT provides certain advantages.
“For one, an ILIT can help you avoid having your policy death benefit included in your estate for federal estate tax purposes. Plus, “an ILIT enables you to fully leverage the annual gift tax exclusion — $15,000 per donee or beneficiary in 2019 — by using those gifts to pay the premiums on the life insurance in the trust,” Elbert adds.
DOES AN IRREVOCABLE LIFE INSURANCE TRUST STILL MAKE SENSE TODAY?
- The current estate tax laws are set to revert.
- You may still have a state estate tax problem.
- ILITs provide protection beyond taxes.
References:
Jacobs, C. (2019, September 09). Irrevocable Life Insurance Trusts: What You Need to Know. Retrieved August 31, 2020, from https://www.northwesternmutual.com/life-and-money/what-is-an-irrevocable-life-insurance-trust/