Advanced Estate Planning Techniques

AuthorJeffrey Robert Matsen
ProfessionFounder and managing partner of Matsen Voorhees Mintz LLP
Advanced Estate Planning
Once the fundamental Estate Planning structure has been put in place, and Business and Asset Protection
Levels (previously discussed) have been analyzed, structured, and established to implement the recom-
mended plan of action, business owners and professionals should then focus on some Advanced Estate
Planning Techniques that will help meet their estate, income tax, and legacy placing.
The Irrevocable Life Insurance Trust
Irrevocable Life Insurance Trusts (ILITs) have been utilized by estate planners for several decades. An ILIT
is a Trust that is set up and established for purposes of owning a life insurance policy on the life of the
Trustor or Settlor of the Trust. The Trust pays the premiums to keep the insurance in force, collects the
death benefits upon the insured’s death and distributes the money according to the terms of the Trust. Be-
cause the insured does not own the insurance (the Trust does), the life insurance proceeds are not included
in the insured’s estate for purposes of estate taxes. The insured determines the Trust terms when it is set
up, but since the Trust is irrevocable, it cannot be amended. The ILIT is an excellent way to provide for
heirs, and to avoid estate taxes.
Each year, the Trustor or maker of the Trust can make a gift to the Trust in the amount of the annual
exclusion ($14,000) per beneficiary, without having to pay gift taxes or use any of the gift tax credit.
This gifted amount can be utilized to make the premium payments on the insurance policies. Each year,
the Trustee will be notified that the premium is due and the Trustee then needs to coordinate with the

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