Educational Presentation: REVOCABLE Life Insurance Trusts
For the past couple years I have been asked to speak on various topics surrounding the passage of the Tax Cuts and Jobs Act ("Trump's Tax Law"). With the Unified Credit so high under the new law ($11 M since adjusted for inflation to $11.4 M), an area that is receiving quite a bit of attention lately is the non-estate tax benefits existing strategies and techniques. In the world of planning, tax benefits are always ripe for the picking, but the client must always be willing to give up some sort of control or power for that benefit--control or power affecting other opportunities available to the client. Without the need to make such sacrifice for many clients, it makes sense to revisit the structure of these strategies and see what benefits surface when we remove the restrictive estate tax components.
The IRREVOCABLE Life Insurance Trust (ILIT) is a tried and true tax planning strategy, and has been for many years. By owning life insurance inside of an ILIT, the otherwise taxable death benefit is removed from one's gross estate. However, in order to enjoy this reduction in estate taxes, the client needs to agree to give up any control of the policy once it is in force. With the estate tax applying to less and less families, the need to give up such control provides little, if any additional benefit. One we reconsider the standard ILIT structure, but remove the irrevocability requirement, many other benefits appear, which weren't available before.
The presentation is titled, "Revocable Life Insurance Trusts: A Contemporary Strategy in a New Tax Landscape under the TCJA." Here is a link to the slides for the presentation, and here is a link to the handouts for the presentation.