Tom Meaglia, ChFC®

Chartered Financial Consultant


Investment Advisor Representative

CA Insurance Lic. #0567507

Meaglia Financial Consulting

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September/October 2018

Legacy Planning

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By itself, life insurance — with its income tax-free death benefit — offers families and business owners an efficient estate planning funding vehicle. When combined with a trust, life insurance can accomplish even more.

Multiple Benefits
A life insurance trust isn’t for everyone. Because the trust is irrevocable, you should make sure this estate strategy is what you want. If it is, a life insurance trust offers a number of benefits. This type of trust can provide control, because the trust can include terms that govern how its assets are distributed, which can be a priority for people with minor and young adult children. Another advantage is privacy, as any assets owned by the trust can avoid the public glare of probate.

Estate Tax Tool
Another benefit is that any assets transferred to an irrevocable trust are removed from your taxable estate. This is still important for a couple of reasons.

One, even while the threshold at which federal estate taxes are levied was doubled this year, some states have estate and inheritance taxes on far smaller amounts. If you live in one of these states, an irrevocable trust can save your estate’s beneficiaries money.

Two, life insurance death benefits are not subject to federal and many states’ income taxes, but they can be subject to estate taxes. Putting life insurance inside an irrevocable trust makes the policy’s death benefit free of both federal income and federal estate taxes. Just as with other assets, a trust’s terms can dictate when and how the insurance proceeds can pass to beneficiaries.

Getting Started
To set up a trust, you will need to name a trustee, which can be a loved one, an advisor or even a financial institution. Next, you will need to dictate the trust’s terms for distributing trust assets to beneficiaries, whom you must also name.

If an irrevocable life insurance trust is of interest to you, consult an experienced estate planning attorney to
learn how to get started, as well as an insurance professional to learn how you can most effectively secure
insurance coverage.


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