Estate Planning and Life Insurance: Crafting Irrevocable Life Insurance Trusts Post-Tax Reform

ILITs for Tax Benefits, Navigating the Transfer for Value Rule and Addressing Beneficiary Designations

Recording of a 90-minute CLE webinar with Q&A


Conducted on Tuesday, February 12, 2019

Recorded event now available

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Program Materials

This CLE webinar will prepare estate planning counsel to overcome challenges in drafting irrevocable life insurance trusts (ILITs), offer approaches to navigate the application of the transfer for value rule and exceptions, and review the importance of addressing beneficiary designation issues.

Description

ILITs must be carefully structured and administered to protect life insurance assets from taxation. Drafting effective ILITs is critical to achieving the desired tax benefits and allow flexibility to address challenges related to trustees, modification and termination.

Errors in drafting ILITs are not always apparent at the time documents are created. Even if the ILIT is mistake-free, changes in circumstances may call for the ILIT to be modified. Because ILITs are irrevocable, it is essential to allow for modification.

The application of the transfer for value rule and its exceptions can be complicated. Transfers of life insurance policies and interests in those policies must be scrutinized for possible violations of the transfer of value rule. Reviewing beneficiary designations is vital to avoid future issues.

Listen as our panel of estate planning attorneys provides guidance on the challenges in drafting ILITs, discusses pitfalls to avoid in the application of the transfer of value rules and its exceptions, and points out the importance of reviewing beneficiary designations.

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Outline

  1. Overcoming challenges in drafting ILITs
    1. Pitfalls and planning for them
    2. How to fix them
  2. Tax issues
    1. Gift taxes
    2. Transfer for value
    3. Retained interest rules
    4. Estate and GST taxes
  3. Trustee duties and liabilities
  4. Crummey withdrawal power
    1. Drafting to serve goals of settler and trustee
    2. Designating Crummey power holders
    3. Notice
  5. Strategies for drafting ILITs
    1. Flexibility (planning for changes in circumstances)
    2. Terminations
    3. Modifications
    4. Drafting Crummey powers
  6. Transfer for value rule and exceptions
  7. Beneficiary designations

Benefits

The panel will review these and other priority questions:

  • What impact does tax reform have on estate planning and crafting ILITs?
  • What are the critical provisions in ILITs?
  • What are the pitfalls when using an ILIT? What steps can be taken to overcome those pitfalls?
  • What are the pitfalls to avoid in the application of the transfer of value rules and its exceptions?

Faculty

Soressi, James
James A. Soressi

Atty
Law Office of James A. Soressi

Mr. Soressi's expertise is as a tax attorney in the practice of estate planning, business planning and estate...  |  Read More

Tippett, Scott K.
Scott K. Tippett

Atty
Hagan Barrett

Mr. Tippett's practice focuses on wealth law, as a comprehensive and integrated approach to domestic and...  |  Read More

Zeydel, Diana
Diana S.C. Zeydel

Shareholder
Greenberg Traurig

Ms. Zeydel is the National Chair of the firm’s Trusts and Estates practice, and she focuses on estate, trust and...  |  Read More

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