Q: : I’ve got a significant internet worth and am worried about the estate taxes my loved ones will need to pay after i am gone. Have i got any simple choices for handling this problem?
A: One tool that’s generally utilized by individuals with considerable wealth to cope with estate/inheritance taxes is existence insurance, more particularly an Irrevocable Existence Insurance Trust (ILIT). This really is really one such estate-planning tool for that affluent.
There are lots of advantages to this kind of trust:
1.It offers tremendous versatility. Wealthy individuals don’t always have wealthy heirs. Handling having to pay for estate taxes, which may be up to 40%, could be terribly troublesome for a lot of. Your heirs may have to sell property, stocks, bonds, or perhaps personal property to boost the required cash.
2.When setup correctly, the assets of the ILIT aren’t regarded as area of the estate. The bottom line is, your heirs don’t need to pay taxes on any assets inside the trust.
3.The dying benefit can also be excluded from taxes. In almost all cases, existence insurance proceeds are exempt from taxes and may be used to pay any estate taxes that could come due.
Existence insurance could be a great estate-planning tool. Bear in mind that trusts could be complicated, and it is vital that you locate an attorney using the understanding and experience to put it together correctly.
Existence insurance provides cash to handle taxes along with other expenses. For smaller sized estates, even when taxes aren’t a vital issue, existence insurance can offer great versatility and reassurance for those involved.