{"id":11707,"date":"2016-03-21T10:11:11","date_gmt":"2016-03-21T14:11:11","guid":{"rendered":"https:\/\/legalcounselnj.com\/?p=11707"},"modified":"2023-12-08T05:35:04","modified_gmt":"2023-12-08T09:35:04","slug":"irrevocable-life-insurance-trusts","status":"publish","type":"post","link":"https:\/\/legalcounselnj.com\/irrevocable-life-insurance-trusts\/","title":{"rendered":"Irrevocable Life Insurance Trusts"},"content":{"rendered":"

As I have written previously, there are many different types of trusts.\u00a0 Depending upon what you are trying to accomplish, there may be a trust that can help you.\u00a0 This article is about Irrevocable Life Insurance Trusts, sometimes called, \u201cILIT\u2019s\u201d.\u00a0 The purpose of this trust is to preserve large estates from Estate Tax.<\/p>\n

New Jersey Estate Tax<\/u><\/p>\n

New Jersey assesses Estate Tax against estates worth more than $676,000.00.\u00a0 In this part of New Jersey, Hunterdon County, if you own a home, own some life insurance and have a retirement account, you are probably over the $675,000.00 exemption amount.\u00a0 If you are married, the first step to preserving the assets from estate tax, is to include a credit shelter trust provision in your Last Will (Click here to learn more about Credit Shelter Trusts<\/a>).\u00a0 A credit shelter trust will preserve up to $1,350,000.00 (675,000 x 2) from New Jersey Estate Tax.\u00a0 But what if your estate exceeds $1,350,000.00?
\n\"Robert<\/a><\/p>\n

Irrevocable Life Insurance Trust<\/u><\/p>\n

One of the preservation methods is to create an Irrevocable Life Insurance Trust.\u00a0 Unlike the Credit Shelter Trust in your Last Will, the ILIT is created now, while you are alive.\u00a0 Generally, you purchase a second-to-die life insurance policy\u00a0 (payable upon the death of both spouses) or a single life policy (if you are single), in an amount exceeding the likely Estate Tax amount.\u00a0 This policy is owned by a trust, which is administered by a Trustee (a family member or institution).\u00a0 You pay the policy premium annually to the trust checking account, and the Trustee pays the premium.\u00a0 Upon death, the policy is cashed by the Trustee, and it is used to pay the Estate Tax, thus preserving your estate.\u00a0 It is hoped that the policy premium paid is less than the Estate Tax amount. Any money left after paying the tax can be distributed to your heirs.<\/p>\n

There are some administrative responsibilities required by the IRS and an annual tax return is required to be filed.\u00a0 But, given the tax savings, this work is worth it.<\/p>\n

There are other methods of avoiding Estate Tax<\/a>; this is just one of them.\u00a0 If you would like to discuss ILITs or other estate planning methods, I would be happy to meet with you.<\/p>\n

\n

Robert J. Shanahan, Jr. Esq. focuses his practice in estate planning, elder law and probate matters. Mr. Shanahan additionally practices in business law and non-profit matters. He is a trained, experienced mediator and offers dispute resolution services, particularly for those arising from probate and elder law matters. Additionally, Mr. Shanahan\u2019s firm, Law Offices of Robert J. Shanahan, Jr., LLC, offers a breadth of additional services to families and businesses throughout central New Jersey.<\/p>\n

Mr. Shanahan received his Juris Doctor from the Temple University School of Law in 1985, and obtained licensure in New Jersey in the same year. \u00a0He received a Bachelor of Arts degree in History in 1981 from William Paterson University, with honors. Robert is a member and Past President of the Hunterdon County Bar Association, and is a member of the New Jersey State Bar Association, and its Elder Law and Disability Section.\u00a0 He is also active in the National Academy of Elder Law Attorneys. Robert is a member of the Hunterdon Medical Center\u2019s Bio Ethics Committee and was awarded a Five Star Financial Services Professional Award for 2016.<\/p>\n

You may contact Bob at (908) 751-1551, or robert@legalcounselnj.com.<\/p>\n","protected":false},"excerpt":{"rendered":"

As I have written previously, there are many different types of trusts.\u00a0 Depending upon what you are trying to accomplish, there may be a trust that can help you.\u00a0 This article is about Irrevocable Life Insurance Trusts, sometimes called, \u201cILIT\u2019s\u201d.\u00a0 The purpose of this trust […]<\/p>\n","protected":false},"author":5,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[228,3007],"tags":[],"_links":{"self":[{"href":"https:\/\/legalcounselnj.com\/wp-json\/wp\/v2\/posts\/11707"}],"collection":[{"href":"https:\/\/legalcounselnj.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/legalcounselnj.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/legalcounselnj.com\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/legalcounselnj.com\/wp-json\/wp\/v2\/comments?post=11707"}],"version-history":[{"count":2,"href":"https:\/\/legalcounselnj.com\/wp-json\/wp\/v2\/posts\/11707\/revisions"}],"predecessor-version":[{"id":15685,"href":"https:\/\/legalcounselnj.com\/wp-json\/wp\/v2\/posts\/11707\/revisions\/15685"}],"wp:attachment":[{"href":"https:\/\/legalcounselnj.com\/wp-json\/wp\/v2\/media?parent=11707"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/legalcounselnj.com\/wp-json\/wp\/v2\/categories?post=11707"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/legalcounselnj.com\/wp-json\/wp\/v2\/tags?post=11707"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}