Irrevocable Life Insurance Trusts
Many people know that life insurance can be used strategically as an estate planning tool to limit tax liability. However, when an insurance agent enthusiastically tells you that life insurance proceeds are not taxable, he or she is talking about income taxes, not estate taxes. This distinction is very important if you are concerned about optimizing the tax position of your estate.
While your life insurance proceeds are not subject to income taxes upon your death, your beneficiaries could have to pay state and federal estate taxes on what they receive from your life insurance policy or policies if you do not plan properly. An irrevocable life insurance trust can be used to prevent unnecessary estate tax exposure by channeling your life insurance money into a trust for your loved ones (rather than your estate) when the time comes.
Offering Practical Advice Regarding Life Insurance Trusts
At the Law Offices of Nancy M. Rice, our attorneys are well-versed in all aspects of elder law and estate planning, including complex trusts. We have been involved in the establishment of custom-made trusts since the 1980s. If a life insurance trust is in your best interest — it may or may not be — we can help you create one.
If your life insurance policies benefit individual family members, that life insurance income is includable for federal and state estate tax purposes. And, importantly, while the federal estate tax limit is $5 million, New Jersey’s limit is a less generous $675,000. If this concerns you, call us.
Estate Tax Attorneys Serving Toms River, Cherry Hill, Linwood And All Of New Jersey | Contact Us
Attorneys with the Law Offices of Nancy M. Rice are admitted to practice in New Jersey and Pennsylvania. We serve residents of those states and as the local representative for out-of-state executors and beneficiaries of wills and estates in New Jersey and Pennsylvania probate courts.
Do you have life insurance-related questions that can only be answered by a lawyer? Contact us to discuss your needs with a New Jersey attorney for irrevocable life insurance trusts.