This article is the second series of estate planning articles regarding irrevocable life insurance trusts.
An irrevocable life insurance trust isn't just for the wealthy with estates over $ 5.25 million. This type of trust can be useful for protecting the assets of medium-sized estates to protect them against possible lawsuits and claims.
For example, when a life insurance policy is held by the trust, the cash value (if any) and the proceeds are also protected against potential claims by creditors. As part of your estate planning, you can arrange for a set amount of savings to be transferred to the trust each year and the funds in the irrevocable trust will be used to pay the policy. Over time, great value can be created in the irrevocable life insurance trust.
For example, one of my forty-two (42) year old clients had sufficient income to transfer the maximum of $ 14,000 per year without tax consequences on donations. Therefore, as part of her estate planning, we set up a life insurance trust so that she could enjoy the following asset protection benefits:
- The annually deposited money transferred each year and the plan proceeds were fully protected against possible claims and lawsuits from creditors.
- The money transferred worked similar to a 401k plan in which the money grew and was compounded without any income tax.
- All the needs of the trust could be taken out of the cash value of the policy.
- Upon his death, the proceeds of the plan would be available to his family without any income or inheritance tax.
Creating an irrevocable life insurance trust can be a viable option in your estate planning process when you use a viable method of protecting assets from creditors, thereby protecting your family estate from any legal action. future justice. There are several options to explore in the estate planning process, and a life insurance trust is just one of the many instruments that are worth exploring with a protection lawyer. actives.
Therefore, before you create an irrevocable life insurance trust for your estate plan, you may want to meet with a lawyer to discuss and manage the drafting of your estate planning instruments to ensure that the insured fires the best of an irrevocable life insurance trust.
This article reflects my personal opinions only and is not construed as creating an attorney-client relationship. The case-specific information in this article is for illustrative and educational purposes only. The article is not intended to provide specific legal advice. The topics of the articles may or may not be updated, and the entries may be out of date by the time you view them.