Irrevocable Life Insurance Trust, also called ILITs, are ideal vehicles for sheltering insurance proceeds from your taxable estate so long as the policy need not be adjusted or tampered with by the subject to whom the payout on death is based.  If a person is using the life insurance policy as an investment vehicle, there is a good chance that they will want to spend down that policy’s accrued value later in life.  The ILIT will not permit that. 

In that scenario, we usually recommend taking the accrued value out as a loan immediately and then transferring the new $0 cost basis policy into the ILIT or purchasing a new term policy through the ILIT and using that benefit to offset the tax consequence of the whole life or universal policy.

For more information on the estate tax and protecting your family’s financial future, please contact the estate planning attorneys of Wild Felice & Pardo, P.A. at 954-944-2855 or via email at info@wfplaw.com.  Let us protect what you value most.

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