• Skip to main content
  • Skip to primary sidebar
  • Skip to footer

Kuhn and Kuhn Law Firm

South Carolina Estate Planning Attorneys

  • Home
  • Our Firm
    • About Our Firm
    • About The American Academy
    • Advantages of Working With Our Firm
    • Attorney and Staff Profiles
    • Talkin Law
  • Services
    • Asset Protection & Business Planning
    • Charleston Pet Planning
    • Elder Law & Medicaid Services
    • Estate and Gift Tax Figures
    • Estate Planning Services
    • Family Farms and Businesses
    • Healthcare Documents and DPOAs
    • Incapacity Planning
    • LGBTQ Estate Planning
    • Living Trusts
    • Probate
    • SECURE Act
    • Special Needs Planning
    • Will Packages
  • Reports
    • Advanced Estate Planning
    • Basic Estate Planning
    • Estate Planning for Niches
    • Trust Administration
  • Resources
    • Client Resources – Estate Planning
    • Consumer Resources – Estate Planning  
    • Elder Law Reports
    • Professional Resources
  • Contact Us
    • Directions to Our Charleston Office
  • Blog
Home / Estate Planning / Three-Year Wait for ILITs

Three-Year Wait for ILITs

November 12, 2012 by John Kuhn, Estate Planning Attorney

An irrevocable life insurance trust can be a very useful tax efficiency tool for people who have valuable life insurance policies.

If you simply make someone the beneficiary of a policy that you own as an individual he or she will receive the proceeds free of income tax. However, these proceeds will be considered to be a part of your estate for estate tax purposes.

Given the fact that the maximum rate of the estate tax is 35% this year and 55% in 2013 you certainly want to do whatever it takes to reduce your liability. To that end you could place your policies into an irrevocable life insurance trust.  They then become the property of the trust and you have no incidents of ownership. Therefore, the proceeds would not be considered to be part of your taxable estate.

That is, if you live for three years after placing your policies into the trust. This three-year waiting period can be avoided if you establish the ILIT and have the trust purchase the insurance policies.

It is true that the estate tax is not imposed on transfers between spouses. But if you are thinking that you could make your spouse the beneficiary of policies that you own you have to consider the fact that he or she would be in possession of the proceeds. They would become part of his or her estate and as a result they would be quite taxable.

Without question, you have to be aware of the tax man when you are making preparations for the future. The best way to proceed when the estate tax is an issue is to engage the assistance of a seasoned, savvy South Carolina estate planning lawyer.

  • Author
  • Recent Posts
John Kuhn, Estate Planning Attorney
Former South Carolina State Senator, John Kuhn is a founding partner of the Kuhn & Kuhn Law Firm.The Kuhn & Kuhn Law Firm is a boutique estate planning (wills, trusts and probate) firm, which he and his wife opened in 2002.The law firm was created to serve clients who want an excellent and thorough estate plan.
Latest posts by John Kuhn, Estate Planning Attorney (see all)
  • Preparing for Coronavirus - March 10, 2020
  • Incapacity Planning - December 20, 2018
  • Special Accounts for People with Special Needs - December 17, 2018

Filed Under: Estate Planning, Wills & Trusts Tagged With: Estate Planning, Inheritance Planning, Trusts

Primary Sidebar

Subscribe to Our Blog

Kuhn & Kuhn Law Firm

Charleston
473 Savannah Highway
Charleston, SC 29407
Phone: 843-577-3700

Charleston Map

map for Charleston office

Kuhn & Kuhn Law Firm

Summerville
421 Old Trolley Road
Summerville, SC 29485
Phone: Our Satellite Office

Summerville Map

map for Summerville office

Opening Hours

Monday9:00 AM - 5:00 PM
Tuesday9:00 AM - 5:00 PM
Wednesday9:00 AM - 5:00 PM
Thursday9:00 AM - 5:00 PM
Friday9:00 AM - 5:00 PM

Footer

  • About The Academy
  • Disclaimer
  • Privacy Policy
  • Sitemap
  • Contact Us

© 2023 Kuhn and Kuhn Law Firm
All Rights Reserved.
Attorney Advertisement

footer-logo

Subscribe to our newsletter

  • Facebook
  • Linkedin
  • Youtube
  • Twitter

© 2023 American Academy of Estate Planning Attorneys, Inc.

Copyright © 2023 · Kuhn & Kuhn on Genesis Framework · WordPress · Log in