Why your life insurance trust might not work
New clients came in with two life insurance trusts—professionally drafted, signed, notarized, and organized in beautiful binders. There was just one problem: the trusts didn’t do anything.
In this episode, Jill breaks down what an irrevocable life insurance trust (ILIT) is, when it actually makes sense, and how it fails when no one follows through. This is a real-life look at the gap between having documents and having an estate plan that actually works.
What You’ll Learn in This Episode
What an irrevocable life insurance trust (ILIT) actually does
Why ILITs are primarily used to address estate tax
The current federal estate tax exemption and why most people don’t need an ILIT
The difference between estate tax and estate income tax (Form 706 vs. Form 1041)
Why “setting up” a trust is not the same as “funding and administering” it
The key questions to ask about any life insurance policy: Who owns it? Who is the beneficiary?
Why an ILIT that isn’t connected to the policy is just a stack of paper
What’s actually involved in creating and maintaining an ILIT
How gift tax rules apply when funding a life insurance trust
What Crummey letters are and why they matter
Why serving as trustee is a real job, not just a title
How the “trust recession” is changing the way people approach estate planning
Resources & Links
Watch this episode on YouTube: https://youtu.be/JaE0tkaacoU
Episode 5, Why you shouldn’t worry about the estate tax: https://www.deathreadiness.com/podcast/why-you-shouldnt-worry-about-the-estate-tax
Get your copy of The Death Readiness Playbook: www.deathreadiness.com/playbook
Connect with Jill:
Website: DeathReadiness.com
Email: jill@deathreadiness.com
Learn more about Jill’s solutions
Subscribe to the Death Readiness Dispatch!
Ask a question for Tuesday Triage
Did you enjoy this episode? Share it with someone you care about.
