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Friday, November 20, 2009
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Advanced Life Insurance
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Call us at (800) 940-3002
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What is an Irrevocable Trust?
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DISCLAIMER: The purpose of this information is to provide general information which
is subject to change and is specific to state law.
ReliaQuote is not providing legal advice. If you have a specific legal issue
or accounting issue, you should consult with a lawyer who is licensed to practice
law in your jurisdiction or a certified public accountant familiar with tax regulations
in your jurisdiction. |
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An irrevocable trust is a trust in which the grantor cannot change the terms of
the trust or terminate it. In addition, the grantor does not have access to the
funds in the trust.
There are other characteristics of an irrevocable trust:
- This type of trust may be used as part of a broader estate plan to push the proceeds
of a life insurance policy outside of the insured’s estate, thereby avoiding estate
taxes.
- Once set up, an insured cannot change the beneficiary nor the trustee and cannot
borrow money from the cash value of the life policy.
- Transferring an existing life insurance policy may create ownership issues. It is
best to place a new policy into a trust.
- A Crummey Trust can help avoid paying gift or estate tax by exempting the premium
payments.
- The proceeds from life insurance in this type of trust can help provide liquidity
need to pay estate taxes on illiquid assets, helping to keep family farms or businesses
within the family.
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