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Insights
Filtered by tag: Ilit — View all
What is an Irrevocable Life Insurance Trust?
Life insurance is an important estate planning tool; however, life insurance proceeds can be quickly diminished by taxation. This is due to the fact that a policy's face value is often included in a decedent's taxable estate. For instance, if you own a life insurance policy with a face value of $2 million dollars and you have other assets valued at $4 million dollars, then at the time of your death your estate would be valued at $6 million dollars. Your heirs would be exposed to estate tax liability on the amount exceeding $5.25 million dollars, the current estate tax exemption, (which is always subject to change). Notwithstanding these facts, proper planning can protect life insurance proceeds; one way to minimize the threat is to create an irrevocable life insurance trust ("ILIT").
