March 6, 2013
Estate Planners Focus on the Multipurpose Irrevocable Life Insurance Trust
Wealthy clients are no longer concerned about the federal estate tax. However, now the focus has shifted to the state estate tax. Estate planners are looking for a way to achieve many client goals with one tool to bring costs down and benefits for clients up. Many believe that the multipurpose irrevocable life insurance trust (MILIT) is the answer. The conventional approach to save on estate tax is a bypass trust. Nevertheless, the bypass trust will not get an increase in the gain amount, which could result in the beneficiaries of the trust paying the bill. Some affluent clients have irrevocable life insurance trusts (ILIT). An ILIT is a common estate-planning tool used to safeguard life insurance proceeds. An ILIT shields the proceeds from creditors and preserves the proceeds for surviving family members. Another common approach to save on estate tax is the Spousal lifetime access trusts (SLATs). SLAT provides a means for a client to develop assets outside of his estate, but still provides access of the assets to the beneficiaries. SLAT property remains taxable and safeguards trust property. The client will pay the tax on his estate, but can develop his assets outside of his estate. Ultimately SLAT, reduces the size of an estate and thus the estate tax.
Estate planners believe when you combine the advantages of the bypass trust, ILIT, and the SLAT the MILIT is born. A MILIT does not have to abide by the state estate tax exemption. A MILIT provides protection for up to $5.25 million in assets. Moreover, clients can have a single trust as an alternative to three. For this reason, using a MILIT may save clients money in legal costs and administration fees. Another benefit the MILIT is while the client is alive the MILIT has the income tax shelter of a permanent life insurance policy, but after the client's death, the MILIT provides money to family members with the lowest income. Another advantage of a MILIT is that it is put in effect right away. This provides clients with an opportunity to address problems with the MILIT before death and avoid problems for heirs.See Martin Shenkman, Wealthy Need a New Trust Strategy, Financial-Planning.com, Mar. 1, 2013.
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Is that screw thigamajig reserved for the service?
Posted by: brian j. cohan | Mar 6, 2013 5:08:41 AM