Avoids Inclusion of Life Insurance Proceeds in Insured's Gross Estate
The goal of an ILIT is to remove the life insurance proceeds from the insured's gross estate for federal estate tax purposes.
No Gift Taxes
A Crummey withdrawal right granted to each beneficiary, when used in conjunction with the gift tax annual exclusion amount under IRC A?2503(b) and gift splitting under IRC A?2513, allows the grantor's payment of premiums to be gift tax free.
Remove Policy from Gross Estate
The transfer of an existing life insurance policy to an ILIT can generally be accomplished with little or no gift tax having to be paid due to the fact that the gift tax value of an existing life insurance policy is a fraction of the death benefit
The transfer of a Life Insurance Policy to an ILIT gives the insured more control over the policy than if it were gifted outright
If the Life Insurance proceeds are needed t provide liquidity to the insured's estate, the trustee can be authorized to buy assets from the insured's estate or loan funds to the estate.
Hedge against repeal of Fedeal Estate Tax
An ILIT ensures predictable results whether the estate tax is repealed or not.
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