The Irrevocable Life Insurance Trust
A trust lawyer St. Peters, Missouri residents choose from Legacy Law Center can create a trust on your behalf that suits your needs. Unless you’re already familiar with how various trusts work, you may have some questions about irrevocable trusts and how they work. A St. Peters trust lawyer from our firm can sit down with you and review all of your trust options and address questions specific to your estate.
Life Insurance Policies
Anything you place in an irrevocable trust cannot be changed, modified or removed from the trust. This includes a life insurance policy. Why place a life insurance policy in an irrevocable trust?
If your life insurance payout will be a substantial sum of money, your heirs can avoid estate taxes by placing the policy in a life insurance trust. With an Irrevocable Life Insurance Trust (ILIT) the death benefits are paid to the trust and not directly to the heirs. Therefore, the proceeds from the insurance policy are not included in the taxable estate of the individual who passed away. This is how it escapes an estate tax. There are additional benefits as well:
- If any of the beneficiaries are ever involved in a lawsuit, creditors will not be able to access any assets that reside in the ILIT, because theses assets are not considered to be owned by the beneficiaries.
- This trust can also be used to manage fund for minors or adults that you do not trust to property handle the funds themselves. The trust selects a trustee to oversee the funds and carry out the terms as they were designed by the creator of the trust.
- The ILIT can also contain provisions as to the use of the proceeds. These include an option to purchase assets from the estate, or create a conventional income amount or a one time sum to the beneficiaries.
Gifting Money to the ILIT
The owner of the trust can gift money to the trust to cover the cost of the premiums of the life insurance policy. The policy can be canceled if the grantor stops gifting money to the ILIT to cover the cost of the premiums. However, if the policy has generated a cash value, that money cannot be recovered. A trust lawyer St. Peters, Missouri community members rely on may suggest that this is an important consideration when deciding if this type of trust is right for you.
Your existing life insurance policy can be gifted into this trust; however, there may be tax implications when doing this, so please contact a trust lawyer St. Peters, Missouri families trust from Legacy Law Center to discuss any potential complications.
Choosing a Trustee
How do you select a trustee for the ILIT? A trust lawyer St. Peters, Missouri locals recommend can provide you with guidance. It is important to choose an individual you feel will carry out the responsibilities including the following:
- Establishing the trust account
- Choosing the insurance company and the appropriate policy
- Collecting the gifts from you to cover the premiums
- Apprising the beneficiaries of the gifts
- Take care of the paying the premiums of the policy
Legacy Law Center: Your Choice for a Trust Lawyer in St. Peters, Missouri
A financial advisor can may provide the guidance you need when choosing and establishing a trust. Call 636-486-2669 today to speak with a respected trust lawyer St. Peters, Missouri offers from the Legacy Law Center.