Tampa Irrevocable Life Insurance Trusts Attorney
Tampa Crummey Trusts
Buying life insurance is an excellent way to provide for your family after your death. Life insurance can cover funeral expenses, medical bills, debts, as well as being a source of income for your loved ones. While the many benefits of life insurance are well known, many people are not familiar with some of the drawbacks of traditional life insurance. Did you know that the amount payable on your policy will be added to your estate? This means that when you die, your life insurance will increase the value of your estate. Such an increase in estate value could lead to serious tax consequences. Federal tax law grants a tax exemption based on the size of your estate. So, if your estate surpasses this legally defined limit, your family may have to pay a large estate tax. One way to avoid adding your life insurance to your estate is by creating an irrevocable life insurance trust (ILIT).
How Irrevocable Trusts Work
An irrevocable trust is one that generally cannot be modified or changed after creation. In other words, once you have executed an irrevocable trust, you cannot change the ownership of it. Another key feature of irrevocable trusts, such as ILITs, is the distinction between trust assets and the grantor’s estate. As the grantor of the trust, when you put your assets into an irrevocable trust those assets are no longer considered part of your estate. This is especially beneficial for estate tax purposes. Since the trust assets are not included in the value of your estate, they will also not be taxed under an estate tax. Placing assets such as your life insurance policy in trust can decrease the estate tax bill your family may face.
Benefits of Your ILIT
An ILIT trust can serve this purpose. ILITs are types of Crummey Trusts, which are designed to provide a gift for beneficiaries while also excluding those gifts for gift and estate tax purposes. Once you have created the ILIT, you can gift your life insurance policy to the trust. Since an ILIT qualifies as a Crummey Trust, you could gain significant gift and estate tax reductions. Creating any type of Crummey Trust, including an ILIT, is a complicated legal process. To ensure you gain the most out of your ILIT, you should consult with an experienced estate planning attorney in your area.
Call Tampa Trust Lawyer Today
If you have concerns about your family paying a hefty tax bill after your death, contact David Toback today. He understands the complicated federal tax laws, and uses that knowledge to your benefit. With over 17 years of tax law and estate planning experience, David Toback can create a trust that meets your financial goals. He has helped numerous Tampa residents execute valid irrevocable life insurance trusts and other Crummey Trusts. He understands the complications you face and benefits you could gain through these trusts. Instead of getting overwhelmed by your options, contact David Toback today at (813) 252-7529. He will thoroughly explain your choices, and offer practical legal advice to help you meet your goals.