GST Tax and Irrevocable Life Insurance Trusts

GST Tax and Irrevocable Life Insurance Trusts

Almost all individuals who establish irrevocable life insurance trusts are wealthy individuals. Many of these are super wealthy and are attempting to transfer many millions of dollars of assets downstream, not only to their children, but also to their grandchildren. A classic arrangement is for a client to place assets (including life insurance) into a trust and direct that income is to be paid to the client’s spouse for life and then to the client’s…

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How to Obtain a Marital Deduction for Property Not Left Outright to a Spouse via the QTIP Trust

How to Obtain a Marital Deduction for Property Not Left Outright to a Spouse via the QTIP Trust

It is currently possible to obtain a marital deduction for property that is not left outright to a spouse. In fact it is possible to specify that the principal of a client’s estate must pass to his children or some selected party other than the surviving spouse and still obtain the marital deduction. The vehicle for such planning is called a QTIP trust, a trust that holds qualifying terminable interest property. Through a QTIP trust,…

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Overview of Life Insurance as Respects the Generation Skipping Transfer Tax

Overview of Life Insurance as Respects the Generation Skipping Transfer Tax

A generation-skipping transfer (GST) tax is levied, in addition to any gift or estate taxes that apply to the transfer, on the value of life insurance (and/or any other property) transferred during lifetime or at death without adequate consideration to a transferee who is in (or who is assigned by statutory law to) a generation that is at least two generations below the transferor’s generation (such a transferee is called a skip person).1 For example,…

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