[WSBAPT] Life insurance trust

[John Creahan]

Lovie,
I may be missing something, but I don't understand why your clients might need an ILIT from the information you provided. What issue would the ILIT solve?
Thanks,
John

John Creahan
206-621-5848
www.cairn-law.com<http://www.cairn-law.com/>


From: wsbapt-bounces at lists.wsbarppt.com [mailto:wsbapt-bounces at lists.wsbarppt.com] On Behalf Of Lovie Bernardi
Sent: Friday, February 27, 2015 11:29 AM
To: wsbapt at lists.wsbarppt.com
Subject: [WSBAPT] Life insurance trust

Dear listmates,

Clients are a married couple seeking an estate plan. Their combined gross estate, excluding life insurance, is about $1.5 million in community property. However, husband owns a $500,000 whole life insurance policy naming the wife and two term policies totaling $1 million, also naming wife. Wife has a $750,000 term policy, naming husband. All policies were paid for with community funds. It occurred to me that a life insurance trust would be worth looking at to keep these funds from being included in the gross estate of both. Because I have never written a life insurance trust, I've spent a couple of days researching the issues and have gleaned the following: (1)In order to avoid both spouses from having retained an interest in the policy, the policy cannot be deemed to be community property. Therefore, a separate property agreement will be necessary for both the policy and any funds that are used to pay the premiums. (2)Practitioners are encouraged in the Washington Life Insurance Trust Deskbook to avoid  a spouse as a beneficiary of a life insurance trust if at all possible. (3)If the policy or policies are moved to the trust, and the client dies within three years, it will still be counted in the decedent's estate. Clients, prior to meeting with me, were considering dropping the two term policies on the husband's life. They will be meeting soon with their agent.

Has anyone written a life insurance trust? Is the scenario described a situation that calls for one? Are there alternatives that would be better to pursue? Thanks in advance for your input.

Lovie Bernardi
Attorney at Law
Seligmann & Flaherty, PLLC
216 First AVE S, #450
Seattle, WA  98104
(206) 682-2616

lovie at sbfirm.com<mailto:joni at sbfirm.com>
http://sbfirm.com<http://sbfirm.com/>


-------------- next part --------------
An HTML attachment was scrubbed...
URL: <http://mailman.fsr.com/pipermail/wsbapt/attachments/20150228/3dc832fc/attachment.html>