If you haven’t considered life insurance before then today should be the day you do! Life insurance provides assurance for your family after you die. Funeral expenses, business expenses, unpaid mortgages and other expenses can cause the surviving family members to suffer a great financial burden. Life insurance can be a way to alleviate this stress. However, since you own the life insurance it will contribute to your estate’s overall value upon your death which means your family may face unnecessary tax issues. Luckily, this too can be remedied by seeking the help of a qualified estate planning attorney.
An Irrevocable Life Insurance Trust (ILIT) is an estate planning tool commonly used to remedy the above scenario. By creating this type of trust, you allow your family to still benefit from the life insurance without the hassle of a possible tax issue. The ILIT transfers the benefit into the trust and you relinquish all control of the life insurance policy. Relinquishing control is required by the IRS if you wish to avoid estate taxes. Doing so removes the life insurance from your estate and decreases the taxation your family may potentially face. The end result is an increase in overall asset protection for the family. When creating the ILIT you must designate an individual you trust to distribute the assets (a Trustee) as well as designate a beneficiary, which can be a spouse, child or any other appropriate individual. You may also include detailed instruction with respect to how you wish your trust to be managed. Once in place the terms of the ILIT cannot be changed. Upon your death the ILIT will transfer the funds to your beneficiaries just as a Revocable Living Trust would but what they will inherit will fall outside the IRS. This estate planning tool offers ultimate tax free protection for the family. Whether you left a home with an unpaid mortgage or a business with a hefty overhead, your family will be able to tackle the financial burden with ease.
For more information on successful Florida estate planning and asset protection techniques, please contact the South Florida law firm of Wild Felice & Partners at 954-944-2855 to schedule your free consultation.
It’s a Wild World. Are You Protected? SM