Tuesday, November 6, 2012
One common way clients take advantage of the current gift tax and estate tax exemption is by gifting assets into a trust and reinvesting those assets once they're in the trust. Another way clients can take advantage of the current gift tax and estate tax exemption is to purchase a guaranteed universal life insurance policy with assets held in a trust. These policies have small cash values relative to the premiums so heirs are limited in how much cash they can withdraw from the trust before the grantor dies. As such, the life insurance option is more suitable for clients who are less concerned about liquidity.
See Voices: Adam Sherman, On Using Tax Exemptions to Buy Life Insurance, WSJ Blogs, Nov. 6, 2012.
Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.