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September 11, 2018

September 11, 2018 Posted by: Category: Retirement Planning No comments

It is clear that the “Tax Cuts and Jobs Act” of 2018 has increased the point of concern for estate tax planning to beyond $20m for married couples. But the use of an Irrevocable Life Insurance Trust continues to have planning value, especially with the sunset clause in the tax change pending in year 2026.

In my 40 years of assisting clients in life insurance planning, I have yet to deliver a death benefit check to a beneficiary who had a real sense of what to do with the money.

And here are a few reasons why to use an ILIT:

The use of an ILIT gives the grantor an opportunity to determine the outcome.

  • You select a guardian
  • You select a trustee
  • Specific language on income, withdrawals, and dispositions
  • Tax benefits

An ILIT’s can add structure to the chaos of unanticipated death. If the ILIT has been in place for years, it most certainly will need updating, possibly a new trustee of an Intentionally Defective clause.

And one final, and often overlooked point, is the life policies that fund the trust, will need auditing and stress testing. Financial markets have changed over time, and will continue to change, so the performance of the underlying investments needs to be tested. The term of years in temporary policies also need to be re-identified.

Irrevocable Life Insurance Trusts will continue to be a strong financial back stop, and critical Legacy planning tool. A refocus on the trust terms, and equally important, focus on the funding vehicle is vital to meet the trust objective.

If you need assistance or an opinion on the funding life policy call Steven Shepard at 203 637-6655 or email SShepard@shepardinsgrp.com


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