Category Archives: Life Insurance

Watch Your Step – Fiduciary Pitfalls for Trustees of Irrevocable Life Insurance Trusts


“Sample cases targeting trustees vividly illustrate unique fiduciary challenges in terms of trust administration and asset management, including for irrevocable life insurance trusts (“ILITs”).  The growing complexity of life insurance products and the potential for increased gifts in the next several years can make ILIT administration far more complicated than anticipated, particularly for non-professional trustees.”

To read the full report, click here.

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Out with the Old, In with the New – Revitalizing or Unwinding Existing ILITs

“In legacy and life insurance planning, using ILITs to acquire life insurance was almost automatic. Now, with lower federal estate tax rates and higher exemptions, some clients may feel saddled with old ILITs that no longer match their goals or provide the intended tax benefits, even though retention of the life insurance makes financial and investment sense.” 

To read the full report, click here.

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A Few Select Insights from the 2019 Heckerling Institute on Estate Planning

“Heckerling presenters emphasized that flexibility in planning will remain key for families and advisors through the on-going roll-out of the TCJA and related guidance.  Given the TCJA’s temporary nature, the possibility for future tax law changes depending on future election outcomes, and the many moving parts of planning for the “modern” family, successful plans will require active management and on-going monitoring of both federal and state tax and legal developments.” 

To read the full report, click here.

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Shifting Gears – Rising Rates and Legacy Planning

“Relatively small shifts in applicable interest rates can have a disproportionate effect on the performance of rate-sensitive legacy planning. Appreciating the potential economic impact of the rate changes and how other factors, such as payment structure, term selection, and asset valuation, also can complement overall performance, may help clients and advisors to better customize the planning to achieve the intended goals.”

To see the full report, click here.

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A View from the Experts: Select Insights from the 2018 Heckerling Institute on Estate Planning

“Presenters at the 2018 Heckerling Institute on Estate Planning identified several enhanced areas of focus for legacy and life insurance planning post tax-reform, including (1) basis adjustment planning, (2) the potential benefits and pitfalls of portability, especially in light of the doubled federal transfer tax exemptions, and (3) the need to review and refresh existing life insurance planning.”

To read the full report, click here.

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“Trouble Ahead, Trouble Behind,” and You Know that Notion Never Crossed My Mind: Avoiding 5 Common Mistakes in Life Insurance Planning

“In a world of increasing commoditization, adding value is key. Advising on product selection and identifying common trouble spots in the development of a life insurance plan can offer advisors significant opportunities to provide value to their clients. Collaborating with other allied advisors early on in the client’s planning also can alleviate many of these problems without creating extensive delays to policy issuance.”

To see the full report, click here.

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Another Planning Option: Combining the Benefits of Life Insurance and the Credit Shelter Trust

“Acquiring life insurance on a surviving spouse inside a CST addresses multiple tax issues – it limits income tax associated with the CST assets and efficiently uses the estate and GST tax exemptions.  This approach also eliminates the need for annual gifts to an ILIT (and corresponding Crummey withdrawal notices) and more complex funding programs, like split dollar arrangements.” 

To read the full report, click here.

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One Size Does Not Fit All: Tailoring an Insurance Trust – A Menu of Options

“Blended families, mobile beneficiaries, and new approaches to trusteeships require a flexible and highly customizable approach to irrevocable life insurance trusts (“ILITs”), one of the most common legacy planning tools.”

To read the full report, click here.

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“Life Insurance Customers Push Back Over Surprise Cost Increases”

“Americans are starting to fight back against a wave of insurance-price increases on decades-old life policies.  Over the past year, several major insurers have notified tens of thousands of people of higher costs to keep their policies in force, with increases ranging from midsingle-digit percentages to more than 200%, according to financial advisers. To justify the increases, they blamed the impact on their investments from the Federal Reserve’s decision to keep interest rates lower for longer.”

For an in-depth explanation of the issue, please see my 12/16/15 email included with the link to the article below.  Bottom-Line – all policies 5 years and older should be reviewed to see if they are performing as originally intended.

To read the full article, click here.

 

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Case Study Series – A Look at Sales: Conquering the Generational Divide with Multi-Tiered Life Insurance Planning

“It seems many advisors focus almost exclusively on one generation at a time when providing legacy management services; however, looking across multiple generations may produce far better results for the family.  Families will often have life insurance needs spanning generations. For advisors, viewing the entire family as one client can provide clarity as to each generation’s potential tax exposure, liquidity requirements, and even financial management needs.”

To read the full report, click here.

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