Life Insurance In Estate Planning  

The Life Insurance Trust has a daunting and an unappealing name. But in reality it is a good way to reduce or eliminate the effect of estate taxes.

In larger estates, where estate taxes are a factor, life insurance trust can be used to great advantage. One of the primary goals while planning for large estates is avoiding the forbidding specter of estate taxes.

Life insurance benefits pass on to the beneficiary on death, free of income tax. But if the person owns the insurance when he dies it is added to his estate. Estate tax is paid on the total amount of the estate and the balance received by the beneficiary. In a larger estate this could effectively reduce the value of the policy by half after the government has claimed it’s due.

The owner of the estate can have his/her children own the policy, making gifts to them each year under annual gift exclusion to pay the annual premium. Most people however, opt for a trust to own the policy instead which is the life insurance trust. The insurance solves the problem of ownership by removing the value of the policy from being included in the estate and therefore removing the assets from exposure to estate taxes.

Insurance proceeds are commonly used to either pay estate taxes due or to pay the proceeds directly to the heirs depending on the individual’s particular situation and desires.

Life insurance trusts work to protect the estate from taxes while keeping the assets under the owner’s watchful eye.

More Articles :




Life Insurance In Estate Planning

What-Is-Estate-Planning      Estate planning involves making plans for the transfer of your assets after death.  Estate refers to all the property owned which includes cash, clothes, jewelry, cars, houses, land, retirement, investments etc. Estate planning involves making sure that most of the estate is transferred to the beneficiaries, paying the least amount of taxes on the estate and assigning guardians for minor children, if any. More..




Home  • Bankruptcy Law   • Business Law  • Constitution Law • CopyRight Law   • Criminal LawEmployment Law   • Family Law   • Immigration Law   • Legal Dispute      • Malpractice   • Personal Injury   • Real Estate Law   • Tax Law   • Traffic Law   • Trust Law Legal News

Life Insurance In Estate Planning )
Copyright © 2012, All Rights Reserved.