Irrevocable Life Insurance Trust

Control the distribution of your life insurance benefits even after you are gone.

Forming an Irrevocable Life Insurance Trust With Anderson

While life insurance proceeds are not taxable to recipients, the entire amount could be included in your estate and subject to estate taxes. By transferring your policy into an Irrevocable Life Insurance Trust (ILIT) or purchasing your policy with an ILIT you can avoid this. Consider this: If your death benefit exceeds the estate tax exclusion, the overage is subject to an estate tax with a rate of up to 40%. If you could avoid this threat, would you?

Not only can an ILIT help to minimize estate taxes due on life insurance payouts, but it can be drafted to provide protections for the ILIT trustees, such as protecting the beneficiary’s payments from creditors. The ILIT would pay the annual premiums with funds contributed by the grantor. These cash contributions qualify for the annual gift tax exclusion, so no tax filings are necessary, and the trust is completely outside of your estate.

Experience You Can Trust

Anderson has experts in estate planning and life insurance who can help you determine if an Irrevocable Life Insurance Trust will benefit you. We can also obtain a life insurance policy if that is the step you are ready for. We can also discuss whether another trust, like a Dynasty Trust, Asset Protection Trust, or Qualified Personal Residence Trust might suit you better.

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What You Can Expect When Forming an Irrevocable Life Insurance Trust with Anderson

After a private Strategy Session with one of our advisors, we determine if an Irrevocable Life Insurance Trust suits your situation and goals. If it is, we will custom draft your documents with the provisions you need. Your ILIT can be drafted to allow indirect access to cash by a spouse or beneficiary. You can also control the distribution of your life insurance proceeds just as you can in a living trust, setting rules of who receives a distribution, when they receive it, how much, and other stipulations.

An ILIT allows you to have more direct control over your life insurance benefits. Speak with one of our advisors today to discuss how an Irrevocable Life Insurance Trust can help you reach your goals and give you the control and protection you deserve. Contact us today to see if an ILIT is right for you.

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Anderson Advisors FAQ

What is an (LLC) or Limited Liability Company ?

A limited liability company (LLC) is a form of business entity that is separate and distinct from a person, like a corporation. The LLC is often described as hybrid between a corporation and a partnership (or sole proprietorship). It allows for the limited liability protection similar to that of a corporation (i.e. your risk is limited to the amount that is invested in the LLC, and personal assets beyond that are usually protected). It also allows for a more flexible setup and operating structure than a corporation while providing the pass-through taxation of a partnership (if a multimember LLC) or a sole proprietorship (if a single member LLC). One of the main advantages of an LLC over a Partnership or a Sole Proprietorship is the Limited Liability protection.

How Is An LLC taxed ?

For federal income tax purposes the profits of an LLC (Limited Liability Company) “pass through” to the personal income of the members/owners. In the case of a single member LLC, it is taxed the same as a sole proprietorship (i.e. typically filed on the schedule C of the owner’s personal income tax filing). In the case of a multimember member it is taxed the same as a partnership (i.e. a 1065 partnership return is filed with the IRS, with a schedule K-1 being supplied to each partner/member showing the proportional profit/loss allocated to them, with this being filed on the schedule C). NOTE: These are general tax explanations and may not apply to everyone. You should confer with the appropriate accounting/tax specialists to make sure you understand your personal tax liability.

Can an LLC be formed with just one member?

There was a time when almost every state required the LLC to have two or more members, but that is no longer the case. This important change came in response to revised IRS regulations that clearly permitted single-member LLC’s. As a result, in most states, if you plan to be the sole owner of a business and you wish to limit your personal liability, you can choose between forming a corporation or an LLC.

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