|
Health
Insurance
Auto
Insurance
Life
Insurance
Dental
Insurance
Travel
Insurance
Home
Insurance
Pet Insurance
Long-term
Care Insurance
Disability
Insurance
Farmers
Insurance
Motorcycle
Insurance
Business
Insurance
Renters
Insurance
Title
Insurance
Cobra
Insurance
Mortgage
Insurance
Estate
Planning
Annuities
Medicare
Supplement Insurance
Flood
Insurance
Earthquake
Insurance
Liability
Insurance
Mobile
Home Insurance
Insurance
Agent
Home Page
About
insbuyer.com
Contact
Us
Your Privacy
|
Eatate Planning
What's the purpose of establishing an irrevocable life
insurance trust?
The aim of an irrevocable ife insurance trust is to keep the death
benefits from a life insurance policy outside of the policyholder's
estate -- and thereby remove the chance that the proceeds will be
subject to a federal estate tax that can reach as high as 55%.
According to "Wealth Enhancement & Preservation" (The
Institute Inc., Denver, Colo.), "A properly established
irrevocable life insurance trust owns life insurance on the life of
the trust maker, thereby keeping the life insurance proceeds outside
of his or her estate and avoiding federal estate tax (federal income
tax is also avoided for different reasons). An irrevocable life
insurance trust keeps policy proceeds free of federal estate tax upon
the death of the trust maker and also on the subsequent death of his
or her spouse. "The proper use of this type of trust allows the
trustees to satisfy the trust maker's estate settlement costs and
death tax obligations without subjecting the insurance proceeds to
those costs and taxes. By utilizing this planning vehicle, a 50%
federal estate tax bracket taxpayer can purchase half as much life
insurance as he or she would own personally and still get the same
after-tax insurance benefit for his or her beneficiaries. Or he or
she could double the amount of the coverage passing to his or her
beneficiaries without paying a dime more of premium."
|
