[WSBAPT] Life insurance trust

Mon Mar 2 11:27:10 PST 2015

What about naming the spouse as the primary beneficiary for the life insurance, the credit shelter trust as the secondary beneficiary and the children’s trust as third beneficiary (there are two young adult children)? If survivor needs the life insurance funds at the death of the first spouse, they could take them outright, but if not, he or she could disclaim to the credit shelter trust. Any problem with that scenario? I’d like to provide flexibility for the surviving spouse. 

From: wsbapt-bounces at lists.wsbarppt.com [mailto:wsbapt-bounces at lists.wsbarppt.com] On Behalf Of John Creahan
Sent: Monday, March 02, 2015 10:59 AM
To: WSBA Probate & Trust Listserv
Subject: Re: [WSBAPT] Life insurance trust

I agree. I don’t see a need for a life insurance trust. A testamentary trust could be used to minimize the survivor’s estate and, if necessary, preserve assets for other beneficiaries.

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 Heather deVrieze
Sent: Monday, March 2, 2015 8:44 AM
To: WSBA Probate & Trust Listserv
Subject: Re: [WSBAPT] Life insurance trust

It sounds to me like a credit shelter trust would be in order. Can be established in the Will, go into effect in the event of non-simultaneous death, and the Trust, if spouse should survive can be the beneficiary of the life insurance, plus whatever other assets spouse might disclaim to save taxes on survivor’s death. 

Heather

Heather S. de Vrieze
Attorney-at-Law

3909 California Avenue SW

Seattle, WA 98116-3705                          

(206)938-5500 

heatherd at westseattlelaw.com <mailto:heatherd at westseattlelaw.com>  

www.westseattlelaw.com <http://www.westseattlelaw.com/>  

Click here to connect with de Vrieze | Carney on Facebook:     <https://www.facebook.com/DeVriezeCarney> 

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From: wsbapt-bounces at lists.wsbarppt.com [mailto:wsbapt-bounces at lists.wsbarppt.com] On Behalf Of Paul Grant
Sent: Sunday, March 01, 2015 8:51 AM
To: WSBA Probate & Trust Listserv
Subject: Re: [WSBAPT] Life insurance trust

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 <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 <tel:%28206%29%20682-2616> 

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

	http://sbfirm.com <http://sbfirm.com/> 

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