[WSBAPT] Life insurance trust

[Paul Grant]

If one spouse dies then the insurance proceeds would put more than $2m into
the hands of the surviving spouse leaving the surviving spouse with a
potential estate tax in WA.


Paul H. Grant - JD, LL.M

Planning with Purpose, Inc
Lynnwood, WA 98036
425-939-9948
www.planningwithpurposeinc.com

Estate Planning. Business Planning. Wealth Succession.

On Sat, Feb 28, 2015 at 1:42 PM, John Creahan <john at cairn-law.com> wrote:

>  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
>
>
>
>
>
> *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 <joni at sbfirm.com>
>
> http://sbfirm.com
>
>
>
>
>
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