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circumstance. At the time of writing, or near the estate tax threshold, an
the period is five years. Had Rose ILIT is a necessary part of your estate
gone into the nursing home within plan.
that window, she would have been
subject to a penalty. An ILIT will also permit you to direct
the disposition of your life insurance
As such, it is essential to plan as far in proceeds in a more specific manner
advance of any major medical ailment than simply designating a beneficiary.
as possible. It is never too soon to Frequently, our clients have their
plan properly. As the above example ILIT benefit their spouse during the
demonstrates, proper planning is spouse’s lifetime, and upon the death
tremendously beneficial to your of the spouse, benefit the children
loved ones, and can be the difference of their marriage. Since an ILIT is a
between leaving a substantial financial trust, you can give specific directions
legacy to benefit your family, or paying in your trust instrument as to how the
that money over to the government, assets should be used, and protect
or other unrelated third parties. the assets from your heirs’ potential
creditors.
Irrevocable Life Insurance Trusts
The Irrevocable Life Insurance Trust Estate Administration
(“ILIT”) is a unique instrument that The following documents should be
serves several important purposes, brought to your attorney after the
two of which we will touch on here. demise of a loved one:
Many people are unaware that the
proceeds of life insurance policies 1. An original or certified copy of a
are considered part of your estate death certificate (look for a raised
for estate tax purposes. By using a seal)
properly drafted ILIT, however, you will 2. The original will (if any)
bring the value of any life insurance 3. A funeral bill marked “Paid”
polices you might hold outside of your 4. A basic family tree with contact
estate for estate tax purposes on both information for close relatives
the state and federal level. For those
of you whose net worth puts them at
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