Irrevocable life insurance trusts have long been a popular estate planning tool in a variety of different circumstances to help achieve client goals efficiently and effectively. These were often used to shield life insurance proceeds from the estate tax in New Jersey by making the ILIT the beneficiary and owner of a life insurance policy, which therefore removed the proceeds from the individual’s overall estate.
In 2018, however, New Jersey repealed the New Jersey estate tax and now that the federal estate tax exemption is over $11 million per person today, many estate and trust attorneys have decreased their need and use with ILITs.
However, there are several different benefits to consider with these estate planning tools. Scheduling a consultation with an experienced and knowledgeable estate planning lawyer can be a first step towards recognizing how these can be helpful for your individual situation. An irrevocable life insurance trust gives you more control over your insurance policies and the money that is paid out from them. There are three primary components to an insurance trust.
The grantor is the person who creates the trust, the trustee is the person who manages it and the trust beneficiaries are the people who receive the assets after you pass away. An insurance trust means that the trust owns the policy and therefore, the trustee that you appoint in this role has to follow the instructions placed in your trust, giving you even more control over the proceeds. To learn more about how life insurance factors into the bigger conversation about your estate, schedule a consultation with an experienced New Jersey estate planning lawyer today.