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BSMG Blog: Protecting the Future of Families and Businesses

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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Understanding the Inherited IRA Legacy Plan

Have you encountered a client, maybe a successful business owner or professional, with more than $1,000,000 in their IRA account? Many of these IRA owners have multiple sources of income as they approach their retirement years. 

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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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"Zero-Gift"GRATs and ILITs

 A Tax Efficient Capital Transfer Strategy

Using a so-called “Zero-Gift” Grantor Retained Annuity Trust (GRAT) coupled with an Irrevocable Life Insurance Trust (ILIT) can provide estate, gift, and income tax free transfer of estate assets to heirs in an economically efficient manner.

This article, by BSMG's very own Russell E. Towers, takes a look at the long list of GRAT advantages available under current law. As well as a case study on a zero-gift GRAT in tandem with an ILIT.  

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What To Do With An ILIT When the Estate Is No Longer Taxable

Ask yourself this important question... 

Since the federal estate tax exemption is $5.43 million (single) and $10.86 million (married), does paying premiums for life insurance owned by an Irrevocable Life Insurance Trust (ILIT) that was purchased years ago when the estate tax exemption was much lower make sense anymore?

Are there other important retirement and protection needs that could be covered with the annual premium that has been gifted to the ILIT for many years? 

A current no-lapse single-life universal life (UL) policy or no-lapse survivorship universal life (SUL) policy may still provide a good internal rate of return (IRR) on death benefit at life expectancy. And the pre-tax equivalent is even better because the life insurance death benefit is income tax free. However, the federal estate tax exemption may have only been between $1,000,000 and $2,000,000 when the trust-owned policy was purchased and it made sense at the time to offset projected estate taxes with estate tax free insurance owned by the ILIT.

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Design an IRA Legacy Plan With Life Insurance

The equities market is recovering and it is becoming more common for individuals to have over $1 million in their individual retirement accounts (IRAs). As these individuals are approaching their retirement years they are collecting income from multiple sources such as the owner's job, Social Security retirement benefits, K-1 "pass-through" income from ownership of S-corp or LLC entities, and rental income from real estate.

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Charitable Remainder Trusts & Wealth Restoration ILITs

A Beneficial Planning Tandem

The benefits of a charitable remainder trust (CRT) working in tandem with an irrevocable life insurance trust (ILIT) are significant for charitable-minded estate owners looking to benefit a public charity or their own private charitable foundation. How does a CRT work, and what are the valuable benefits it can provide? The CRT can be formed either as a charitable remainder annuity trust (CRAT) which can provide a fixed lifetime income to the donor or as a charitable remainder unitrust (CRUT) which can provide a fixed percentage end of year value lifetime income to the donor. 

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