The Martin Law Firm is a Pennsylvania estate planning law firm located in Blue Bell, PA. Our experienced Pennsylvania estate planning attorney regularly assists clients with the creation of a Revocable Trust, Living Trust, or other estate planning documents. Contact the Martin Law Firm today to schedule an appointment with a skilled PA estate planning attorney.
Use of a Irrevocable Life Insurance Trust (ILIT)
Life insurance is a valuable estate planning tool because it can provide immediate liquidity to an estate. Life insurance also can provide loved ones with large premiums to help pay for education, the mortgage and maintaining the standard of living for the surviving spouse and children.
Most people do not realize that life insurance proceeds are subject to Federal Estate Tax. Strategic planning with the ownership of life insurance can engender substantial estate tax savings. Estate tax savings with life insurance can be accomplished through the Irrevocable Life Insurance Trust (“ILIT”). If an ILIT is properly structured, the ILIT can save life insurance proceeds from the Federal Estate Tax. Generally, the Irrevocable Life Insurance Trust can be set up as both the owner and beneficiary of one or more life insurance policies. The insured can determine whom the insured wishes to receive the proceeds after his or her death. If done properly, the designation of the ILIT as owner and beneficiary shifts the policy outside of the insured’s estate, so that there are no estate taxes when the policy matures and the proceeds are paid to the trust. No taxes are payable in the surviving spouse’s estate either and as a result of the income tax exemption, the trust pays no tax on the death benefit.
Contact the Martin Law Firm | Pennsylvania Estate Planning
The Martin Law Firm is experienced in Pennsylvania estate planning and drafting the Irrevocable Life Insurance Trust. While ILITs have a certain degree of complexity, in practice they are rather simple to set up and administer with proper legal assistance. Contact the Martin Law Firm today to set up an appointment with an experienced Pennsylvania estate planning attorney.