(Newswire.net — March 26, 2018) Elmhurst, Illinois — Estate planning is one of many aspects of protecting assets for future needs. Many people wish to provide a stable financial future for their loved ones, which include spouses and children. Life insurance allows one to care for their families even after they have passed on. Hart David Carson LLP, a leading estate planning law firm, knows that without certain protections, life insurance policies are subject to steep estate tax penalties, reducing the value of the policies for future use. The firm recommends establishing an irrevocable trust to protect the life insurance policy. These are known as irrevocable life insurance trusts, or ILITs. “An irrevocable life insurance trust reduces the size of one’s taxable estate,” says a spokesperson for the Chicago-area law firm. “This helps to ensure that state and federal estate taxes don’t reduce the overall value of the policy.” To learn more about ILITs and their role in estate planning, visit http://hartdavidcarson.com/planning-irrevocable-life-insurance-trust.html.
In essence, a trust holds ownership of financial assets, including life insurance policies, rather than keeping ownership with the individual. As the asset owner, the trust is not subject to taxes. It is important to note that there are two forms of trusts, revocable and irrevocable. A revocable trust is one that can be modified by the individual after its creation, and the assets it contains are still considered to be part of a person’s estate. In other words, the trustee is still considered the owner of the assets. Because of this, assets are subject to tax penalties, both on the state and federal levels. An irrevocable trust, on the other hand, cannot be modified or changed once it is set up, and the trust takes over ownership of any financial assets. By setting up an ILIT, one’s family receives the full value of any policy payouts upon the individual’s death without tax implications.
In order to function as desired, an ILIT must be set up and structured correctly. This requires the expertise of an experienced estate planning attorney, such as the lawyers at Hart David Carson LLP. Timing is everything in creating an ILIT; if the individual should pass away within three years of the trust’s creation, proceeds from the life insurance policy revert back to the individual’s estate and are therefore subject to taxation. Estate planning attorneys recommend setting up an ILIT as soon as possible to avoid this scenario. Also, it is critical that the trustee or trustees of the ILIT be those that the individual can rely on to protect the trust’s assets. Trustees can be virtually anyone, but are usually the individual’s family members or trusted friends. Finally, when purchasing a life insurance policy, it is important for the individual to be listed on the policy as the insured party and not the policy holder. In the case of ILITs, the policy holder is the trust itself. Death benefits protected by the irrevocable trust go to the beneficiaries without tax penalties. For more information on Hart David Carson LLP and their full range of legal services, visit http://hartdavidcarson.com/index.html.
About Hart David Carson LLP
Hart David Carson LLP is a Chicago-area law firm with experience in business, estate, and personal injury legal services. Since its founding, the firm has been known for providing expert legal counsel and representation for both individuals and business interests. From outside general counsel to complex commercial litigation, dispute resolution, and estate planning, the talented attorneys at the firm offer tailored legal services to fit client needs perfectly.
Hart David Carson LLP
60 W. Butterfield Rd., Suite 325Elmhurst, Illinois 60126
United States
(630) 395-9496
contact@hartdavidcarson.com
http://hartdavidcarson.com