7 Benefits of a Life Insurance Trust

  1. Provides immediate cash to pay estate taxes and other expenses after death.
  2. Reduces estate taxes by removing insurance from your estate.
  3. Inexpensive way to pay estate taxes.
  4. Proceeds avoid probate and are free from income and estate taxes.
  5. Gives you maximum control over insurance policy and how proceeds are used.
  6. Can provide income to spouse without insurance proceeds being included in spouse’s estate.
  7. Prevents court from controlling insurance proceeds if beneficiary is incapacitated.

For more information about Life Insurance Trusts, you can contact our Estate Planning Attorney in Woodland Hills, Los Angeles today.

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5 CommentsLeave a comment

  1. Great simple summary, and I agree with every point but would add one more that is increasingly important given the current economic reality our clients are dealing with.

    Affluent individuals often have a high cash value in their life insurance policies, as much as seven figures in some cases. In some states, like TX, NM, HI and others this cash value is fully protected by state law. In other states that protection is at such a low dollar amount that it is virtually non-existent and that cash value that has been set aside by the family for safety and estate planing can be wiped out by a lawsuit or bankruptcy. In this sense that ILIT can be an important tool for Asset Protection planing, the life planing sister of Estate planning, which is death planning.

    Ike Devji, J.D.

  2. Another point to keep in mind is that transfers of current life policies can raise certain issues. First, the donor must survive for 3 years. Second, if the policies have a large cash value, in addition to the problems just cited in the prior post, gift tax implications need to be taken into account. Third, the loss of this liquid cash surrender value may be somethint the donor may need depending on this other assets.

  3. As a small business owner, I really loved the content on your posts. Thanks!

  4. Thanks to this excellent article. I read your blog and recommend this its very helpful and very nice.

  5. Very good points in your post. These, besides others, are crucial factors that determine if you will be satisfied with your life insurance.


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