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BSMG Blog: Protecting the Future of Families and Businesses

Universal Life Policy With Indemnity LTC Rider Owned By An ILIT

The use of an indemnity Long Term Care (LTC) rider is crucial to keep the life insurance death benefit estate tax free. That’s because any rider benefits will be paid only to the Irrevocable Life Insurance Trust (ILIT) as policy owner, and NOT used to pay extended care costs directly to the extended care provider. Since LTC benefit claims are paid only to the ILIT, this indemnity style LTC rider does NOT create an incident of ownership in the UL policy.


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President Trump Signs Tax Reform Into Law

 

After a long and contentious political battle, the U.S. House (224-201) and U.S. Senate (51-48) have passed the Tax Cuts and Jobs Act of 2017.  President Trump signed the bill into law and it goes into effect on 1/1/2018.  Major changes in personal income taxes, business income taxes, and estate taxes will go into effect for tax year 2018.  

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2017 Tax Reform Moves to House and Senate Conference Committee

 

The U.S. Congress has spent the last few months slowly working its way through the legislative process to provide major tax reform.  This reform impacts personal income taxes, business income taxes, estate taxes, and taxation of foreign business income.  The U.S House of Representatives passed its version of the Tax Cuts and Jobs Act of 2017 in early November.  The U.S. Senate just passed its version of the Tax Cuts and Jobs Act of 2017 last week. 

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Advanced Sales: Creating an Inherited IRA Legacy Plan

 

With the recovery of the equities markets after the economic downturn of 2008-2009, it is common for successful business owners, professionals, and other individuals to have more than $1,000,000 in their IRA account.

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IRC Section 1035 Exchanges Require Special Attention

Often a policy review of your client’s existing life insurance and annuity contracts will conclude that a more cost efficient contract with better guarantees and rates of return makes sense. This will cause a producer to seek a potential transfer of the existing cash values to a new contract via a tax free Section 1035 exchange.

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Family Limited Partnerships vs. Irrevocable Life Insurance Trusts


Which entity to own life insurance?

The popularity of the irrevocable life insurance trust (ILIT) is well documented. Billions of dollars have been gifted by estate owners to single life and survivorship life irrevocable trusts to help fund the payment of federal estate taxes. Yet, a number of disadvantages revolving around lack of flexibility and lack of control discourage the use of such trusts in certain situations. When estate owners realize an irrevocable trust cannot be changed, they sometimes decide to think about it. Or when estate owners realize they don't own the cash value of the policy and have no access to it for lifetime financial needs, they feel a loss of control.

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Linked Benefit Products Offer Great Section 1035 Exchange Options

IRC Section 1035 provides that exchanges into life insurance or annuity contracts with Long Term Care (LTC) riders will be income tax free because these riders are treated as  LTC contracts under IRC Section 7702B(e). These Section 1035 tax free exchange provisions positively impact so-called linked benefit life insurance-LTC products and linked benefit annuity-LTC products.

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10 Benefits of a Well Drafted Durable Power of Attorney Document

As people age into their 80s, with longer life expectancies, their mental capacity is often diminished. This declining capacity presents an interesting issue which can impact whether continued gifting of premiums to Irrevocable Life Insurance Trusts (ILITs) can take place. 

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5 Techniques to "Rescue" Your Client's Life Policy From an ILIT

Do your clients ever ask if there are options for transferring a policy out of an ILIT when the terms of the trust no longer meet their planning objectives? Review these 5 techniques to "rescue" their life insurance policy from an ILIT and be prepared with the answer!

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5 Steps to Transition to Advanced Markets

Are you ready to take your career to the next level and break into advanced markets?

With few hours in a day, it can be tempting to trade traditional and individual life insurance business sales for more advanced markets, where the bottom line is often notably increased and the cases more intricate. Why would you spend the same amount of time for a less prosperous and sometimes more routine result?

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