Irrevocable Life Insurance Policy
Description
How to fill out Irrevocable Funded Life Insurance Trust Where Beneficiaries Have Crummey Right Of Withdrawal With First To Die Policy With Survivorship Rider?
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FAQ
Administration of Irrevocable Insurance Trusts Transfer insurance policies and designate trust as beneficiary. ... Notify insurance company of trustee's address. ... Open trust checking account. ... Verify insurance company records. ... Legal title of the trust. ... Payment of premiums. ... Source of contributions to the trust.
As far as your irrevocable life insurance trust is concerned, however, there should be no need to file trust income tax returns during your lifetimes, as the only type of property intended for ownership by the trust is policies of insurance on your lives which are typically not income producing assets.
The ILIT has its own federal tax identification number and must file annual state and federal income tax returns, although it usually has no taxable income while you are alive. When you die, the entity which owns the policy and collects the death benefit ?lives on,? so to speak, so the death benefits are not taxed.
For this to work properly, the insured cannot own or control the insurance policy. Instead, "the policy is bought with the ILIT as the owner and the beneficiary, and the grantor being the insured," says Loreen Gilbert, CEO and founder of WealthWise Financial Services.
All premiums should be paid by the trustee from a trust owned bank account. The insured usually makes sufficient cash gifts to the trust to allow the trustee to pay the premiums. The gifts should go in the trust checking account, and the trustee should write and sign a trust check for the premium payment.