How to Make Headlines the Hard Way, Part II

Duff, Richard W.
August 1997
Journal of Financial Planning;Aug1997, Vol. 10 Issue 4, p38
Academic Journal
This article focuses on the potential problems in financial planning. People who have accumulated a taxable estate own billions of dollars in life insurance. Their excuse for personal ownership might be that they desire to control cash values, and perhaps they lack information about the merits of irrevocable life insurance trusts (ILIT). The result: Most of these insurance proceeds are subject to estate tax at an insured's death. This can be corrected by using an adaptable ILIT. The overall solution to flexible ILIT lies in better client education and a more creative approach to drafting the documents. Disgruntled heirs seem more likely than ever to contest a will these days. A will can be overturned if the testator is not of sound mind or memory, is unduly influenced or does not properly follow the signing formalities as required by law. When constitutional or equity trusts are advertised as self-managed estate plans that avoid probate, lawyer's fees, executor's fees, income taxes, estate taxes and more, do not believe it! The U.S. Internal Revenue Service is also aware of these scams, and will penalize perpetrators with underpayment fees, penalties and even time in the penitentiary. If a living trust plan seems too good to be true, it is time to straighten it out now by getting your client to a good lawyer.


Related Articles

  • Irrevocable Life Insurance Trusts: An Effective Estate Tax Reduction Technique (Part 1). Abrahams, Adam // NewsQuarterly;Summer2013, Vol. 32 Issue 4, p14 

    The article discusses the estate and income tax issues that arise when irrevocable life insurance trusts (ILIT) are used for reducing estate tax. It defines ILIT as a situation where an insured person assigns ownership and benefits of life insurance to a trustee. The article infers that estate...

  • Creating a marriage made in tax heaven. Blackman, Irv // Contractor Magazine;Sep2011, Vol. 58 Issue 9, p54 

    The article offers the author's insights regarding the combination of an irrevocable life insurance trust (ILIT) and intentionally defective trust (IDT). The author states that the ILIT/IDT strategy eliminates the gift tax problem which depend on the premiums. He notes that the IDT is defective...

  • The 75% Trap. DeFrancesco, Roccy // Financial Planning;Oct2004, Vol. 34 Issue 10, p119 

    Discusses ways to reduce the income and estate taxes on deferred money both for individual retirement accounts (IRA) and qualified plans. Theory behind income in respect to decedent; Case of a client that highlights the inheritance of IRA; Means to avoid a 75 percent tax trap on inherited IRA;...

  • Avoiding Estate Tax Problems Unique to Life Insurance. O'Sullivan, Timothy P.; Thiessen, Michael R. // Journal of Financial Service Professionals;Nov2001, Vol. 56 Issue 6, p68 

    This article discusses planning strategies to be considered to avoid the contemplation-of-death rule without triggering adverse income tax results under transfer-for-value rules when life insurance policies are transferred to an irrevocable life insurance trust (ILIT), either from the insured or...

  • Life insurance trusts can save estate taxes. Kistner, William G. // hfm (Healthcare Financial Management);Jul98, Vol. 52 Issue 7, p94 

    Focuses on the benefits of life insurance trusts in terms of savings in estate taxes. Ways of creating a life insurance trust; Minimizing of gift taxes on cash transfers to a life insurance trust; Means of maximizing the potential gift-tax savings of a life insurance trust.

  • An Effective Tool to Save on Estate Taxes. Daudi, Adil // Muslim Observer;6/3/2011, Vol. 13 Issue 23, p11 

    The article offers information about Irrevocable Life Insurance Trusts (ILIT), an estate planning tool utilized to help minimize taxes by reducing the size of one's estate in the U.S.

  • Advanced Planning Strategies. Miller, Stan; Schrader, D. Scott // Journal of Practical Estate Planning;Dec2007, Vol. 9 Issue 6, p15 

    The article presents the second part of a three-part series that introduces four planning solutions for baby boomer clients who are not solely motivated by estate tax savings in the U.S. Solutions include the retirement irrevocable life insurance trust (RILIT), family bank trust and self-settled...

  • Case Study: Using whole of life policies in IHT planning.  // Money Marketing (Online Edition);10/17/2013, p67 

    The article presents a case study of the use of a whole of life policies in inheritance tax planning. It cites the problem involving some clients who are approaching retirement but are concerned that gifting assets may reduce access to their capital. It explains that clients living longer should...

  • A Checklist of 12 Estate-Tax-Saving Strategies. McDevit, Timothy J. // Journal of Financial Planning;Oct90, Vol. 3 Issue 4, p158 

    High net worth individuals often are so preoccupied with avoiding or reducing income taxes that they ignore federal estate and related transfer taxes, and potential state counterparts to these taxes This can be a fatal mistake because these transfer taxes can take twice as big a bite as income...


Read the Article


Sorry, but this item is not currently available from your library.

Try another library?
Sign out of this library

Other Topics