ILITSIntegrated Labour Inspection Training System (UN)
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For many below the exemption limit, there are several non-tax advantages of ILITs, which still make them a useful planning tool.
Many individuals who own life insurance for estate planning purposes keep it in an irrevocable life insurance trust (ILIT) so that the death benefit proceeds are excluded from the individual's estate.
Example: an expensive-to-maintain irrevocable life insurance trust (ILIT) established by parents during their prime earning years for the benefit of their kids.One issue that can arise when children buy a policy is insurable interest: Is the policy being purchased for a reason that would pass muster with a life insurer and the courts?
Considering the appropriateness of tax law enactments involves discussions of sometimes competing tax policy pronouncements to determine if a proper balance has been struck between them.5 This article questions the balance struck regarding certain estate and gift tax provisions involving ILITs, concluding that improvement is possible.
We've spent decades protecting our clients from the eroding effects of estate taxes, advising them to keep their life insurance outside of the estate, in an Irrevocable Life Insurance Trust (ILIT), in order to leverage the tax advantages of the death benefit.
(13) This comment will then clarify the operation of the grantor trust rules and provide a primer on some of the trusts those rules allow, including GRITs, GRATs, GRUTs, QPRTs, ILITs, and IDGTs.
One of these combines three planning vehicles--a family limited partnership (FLP), a grantor retained annuity trust (GRAT) and an irrevocable life insurance trust (ILIT).
Another option would be for A and B to set up more traditional ILITs that own insurance on themselves as the grantors.
This wasn't the case in the past when policies had to be owned by third parties or by ILITs. Now many same-sex spouses will be able to:
Brody noted that nearly every Life insurance trust is a grantor trust under the Internal Revenue Code, which directs ILIT trustees to use the trust's income to pay premiums.
Many accountants are trustees for some of their clients' ILITs and most probably have $5 million in professional liability insurance.
If an irrevocable life insurance trust (ILIT) holds only term insurance (i.e., with no cash surrender value (CSV)), it is possible (and often recommended) not to allocate any generation-skipping transfer (GST) tax exemption to the trust until after the insured dies.