Irrevocable trusts

Watch Your Step: Fiduciary Pitfalls for Trustees of Irrevocable Life Insurance Trusts

Topics: Fiduciary, ILIT, Irrevocable trusts, Trusts

This WRMarketplace was created exclusively for AALU members by experts at Troutman Sanders and the AALU staff. WR Marketplace #19-14 was written by Michael P. Vito, Counsel, and Jennifer M. Smith, Counsel, Baker & Hostetler LLP. The AALU WR Newswire and WR Marketplace are published by the AALU as part of the Essential Wisdom Series,...

Outlook Not So Good:  Tax Court Speaks to Possible Estate Tax Treatment of Generational Split Dollar (GSD).

Topics: Estate planning, Irrevocable trusts, Split-dollar, Trusts

For the first time, two very recent Tax Court opinions (Est. of Cahill v. Commissioner and Est. of Morrissette v. Commissioner) have discussed the court’s view of the estate taxation of economic benefit GSDs. These arrangements generally involve a parent who enters into a private split-dollar agreement with a life insurance trust agreeing to pay…

It Can Really Last Forever: Irrevocable Life Insurance Trusts & the Generation-Skipping Transfer Tax – 4 Things to Know

Topics: Estate planning, GST, Irrevocable trusts, Trusts

The GST tax generally applies to transfers to irrevocable life insurance trusts (“ILITs”) that benefit both “skip persons” (e.g., grandchildren and more remote descendants) and non-skip persons (e.g., children). The annual GST tax exclusion and GST tax exemption are available to apply to ILITs, but the rules regarding their application are complex.

Case Study Series- Location, Location, Location – Changing the Situs of an Irrevocable Trust.

Topics: Estate planning, Irrevocable trusts, Trusts

Long-term irrevocable (dynasty) trusts can become inefficient over time. Moving the trust to a new jurisdiction may provide opportunities to refresh the administration of the trust, address state income tax issues, strengthen creditor protection, and decant trust assets to a new trust. The authority to move a trust’s situs may be found in the trust…

“Trouble Ahead, Trouble Behind,” and You Know that Notion Never Crossed My Mind- Avoiding 5 Common Mistakes in Life Insurance Planning.

Topics: Estate planning, Irrevocable trusts, Trusts

According to experts, some of the most common mistakes in life insurance planning include: (1) failure to qualify gifts to irrevocable life insurance trust (“ILITs”) for the annual gift tax exclusion; (2) improper allocation of GST tax exemption to ILIT gifts; (3) retention of incidents of ownership in an ILIT-owned policy; (4) failure to understand…

Survey Says- Tax Reform & Client Planning – What Advisors Are Seeing & Saying.

Topics: Estate planning, Grantor trusts, Irrevocable trusts, Trusts

While President Trump and the Republican-controlled Congress have promised major tax reform, uncertainty remains as to the final outcome. Despite this, the advisors surveyed indicate that many clients are still moving forward if the planning approaches satisfy their practical needs and provide flexibility.

One Size Does Not Fit All- Tailoring an Insurance Trust – A Menu of Options.

Topics: Estate planning, Irrevocable trusts, Trusts

ILITs, when tailored to the needs of the ILIT creator (“grantor”), can offer many benefits, including blended family planning, family financial security, estate liquidity, creditor protection, and centralized wealth management for ILIT beneficiaries. With proper implementation and administration, the ILIT’s assets also should not be included in the grantor’s taxable estate.

A Trustee’s Best Friend- Best Practices in Administering Life Insurance Trusts.

Topics: Estate planning, Irrevocable trusts, Trusts

ILITs present unique fiduciary challenges in terms of administration and asset management. The growing complexity of life insurance products, along with the administrative requirements to preserve an ILIT’s intended tax treatment, can make ILIT trust administration far more complicated than anticipated, particularly for non- professional trustees.

Who Can You Trust with Your Policy Finding the Right Fiduciaries for Insurance Trusts.

Topics: Estate planning, Fiduciary, Irrevocable trusts, Trusts

ILITs are a mainstay in legacy and life insurance planning, and having a responsible, experienced trustee is critical for the ILIT to achieve the client’s objectives. Finding suitable ILIT trustees, however, has become increasingly difficult, particularly given the complexities and potential liabilities associated with ILIT administration (both before and after receipt of policy death benefits),…