Consider the use of an ILIT to avoid estate tax

Description

Abstract: Holding a life insurance policy can provide peace of mind if a person has concerns about loved ones’ financial well-being after his or her death. Whether the person “holds” the policy or a trust holds the policy can result in different tax outcomes. In short, if one is left holding the policy at death, its proceeds will be included in his or her taxable estate and may be subject to estate taxes. This article examines the option of creating an irrevocable life insurance trust (ILIT) to hold the policy.