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Why Should Your Estate Plan Include Life Insurance? Insurance Magazine

To the dependent, but the amount is paid in advance. Set up an irrevocable trust for insurance

A irrevocable trust for life insurance (ILIT) is a key factor to be included as part of your estate planning. The trust can control the term or permanent insurance policy for the duration of the time the policy holder lives. The trust can be used for the purchase and transfer of insurance policies. The trust is the owner of life insurance policies. Additionally, trust documents to be used to determine beneficiaries and define how the benefits will be distributed.

The main benefit of an ILIT is the capacity to cut the amount of estate tax due on properties that do not qualify to be deducted as marital or charitable. The way to do this is by removing an insurance policy for life out of the estate. It could aid in the distribution of funds and offer immediate liquidity to beneficiaries.

The ILIT is a three-party agreement. It comprises the grantor (or trustee, insured as well as the beneficiaries. The trust's grantor who is protected by an insurance policy covering life who is responsible for the transfer of assets. It is possible for the grantor to also nominate beneficiaries, but they are not able to terminate or modify the ILIT as it's irrevocable.

The trustee acts as the second entity and owner of the policy. They are the trustees of the trust. They manage the trust up to the point that the conditions and timeframe established by the insurer/grantor met. The life insurance policy is determined through the provisions in the ILIT. Beneficiaries, which are entities or persons who benefit from insurance policies that pay out benefits in the event of the death of the grantor will become the ultimate beneficiaries. If the beneficiary is a minor or has a guardian legal (or parent) will take charge.

There are numerous benefits of having your estate plan include life insurance. This is great news for both you and your heirs. You should however, consult an estate trust attorney

.