Irrevocable life insurance trusts (ILITs) are essentially legal shelters used to preserve your wealth. Like all irrevocable trusts, they circumvent probate, protect assets from creditors, and offer a tax advantage. You can even adopt irrevocable life insurance trusts to make life more comfortable for a disabled loved one receiving disability benefits. Like all irrevocable trusts, the trustor deposits assets into the trust that assumes ownership, separating the assets from the grantor’s taxable estate.
Life insurance trusts are also helpful for entrepreneurs with family businesses. The proceeds from your policy can ensure that the money needed to run the business supports the business without being used for final expenses. For a comprehensive and informed opinion about your business and estate needs, a legal professional at Begum Peláez-Prada PLLC could discuss what a San Antonio irrevocable life insurance trust may mean for you.
Irrevocable life insurance trusts (ILIT) are repositories for life insurance policies taken out by trustors (grantors) and overseen by independent trustees who pay the annual insurance premiums. These trusts receive the life insurance proceeds after the grantor dies and proceed to distribute them to the beneficiaries according to the trustor’s wishes. The trust can only be modified if the beneficiaries agree.
Our pledge is to support you by determining and fulfilling your legal needs. If an irrevocable life insurance trust is right for you, our award-winning San Antonio lawyers at Begum Peláez-Prada PLLC could draft one, explain it pursuant to your circumstances, and answer all your questions.
A trustee charged with paying the annual life insurance premium can access the $18,000 annual gift tax exclusion for each beneficiary. The trust receives the funds and issues a Crummey notice so beneficiaries know they can access it, but the strategy would have them decline the withdrawal, leaving the funds for the trustee to pay the insurance premiums.
Although established life insurance policies can be deposited into an ILIT, the Internal Revenue Service (IRS) will count the proceeds toward the taxable estate if the grantor dies within three years after the transfer.
If your family includes a loved one with special needs, they are most likely receiving Social Security disability benefits and Medicaid for healthcare. These federal programs impose income caps and inheritances, or insurance settlements can disqualify the recipient. ILIT assets can be distributed in a way that does not violate the caps, making your loved one’s life more comfortable. If you are interested in learning more about irrevocable life insurance trusts and what they can provide for your family, contact our experienced San Antonio lawyers at Begum Peláez-Prada PLLC.
Irrevocable life insurance trusts are a way to protect the wealth you amassed from your business interests. You and your family should benefit from your hard work instead of the federal government levying hefty taxes.
For focused attention on your legal needs, consult an award-winning lawyer at Begum Peláez-Prada PLLC to discuss whether a San Antonio irrevocable life insurance trust is for you.
