I Want You to Stop Paying Taxes
Irrevocable Life Insurance Trust (ILIT)




          www.skloff.com
Federal Estate Taxes Can Destroy Wealth

Year    Federal Exemption Federal Estate Tax Rate
2007      $2.0 million         ...
State Estate Taxes Can Destroy Wealth
                                     Top State Estate
State            State Exempti...
State Estate Taxes Can Destroy Wealth
                                      Top State Estate
State             State Exemp...
Beneficiaries of Life Insurance Do Not Pay Taxes, But…

Internal Revenue Code Section 101(a)(1) allows proceeds
from life ...
Hypothetical Life Insurance without ILIT


Insured purchases $5.0 million of life insurance at an
annual cost of $52,000.
...
Life Insurance Proceeds of $5,000,000 without ILIT
Life Insurance Proceeds                      $5,000,000


Life Insuranc...
The ILIT Removes the Proceeds from the Estate

An Irrevocable Life Insurance Trust (ILIT) is a trust that
owns a life insu...
Life Insurance Premiums as Annual Gifts to ILIT
Annual Gifts to the ILIT to pay for the annual life
insurance premiums do ...
Hypothetical Life Insurance with ILIT
Insured has four children (beneficiaries) and establishes an
ILIT, gifting the annua...
Life Insurance Proceeds of $5,000,000 with ILIT
Life Insurance Proceeds                    $5,000,000


Life Insurance Pro...
Conclusions
Federal estate taxes can destroy wealth.
State estate taxes can destroy wealth.
Life insurance provides tremen...
Aaron Skloff, AIF, CFA, MBA
   Chief Executive Officer
   Skloff Financial Group

       908.464.3060



     www.skloff.c...
Upcoming SlideShare
Loading in …5
×

Stop Paying Taxes - Irrevocable Life Insurance Trust (ILIT) - Aaron Skloff, AIF, CFA, MBA - CEO Skloff Financial Group

3,002 views
2,904 views

Published on

Stop Paying Taxes - Irrevocable Life Insurance Trust (ILIT)

Skloff Financial Group
www.skloff.com

Published in: Economy & Finance, Business
3 Comments
3 Likes
Statistics
Notes
No Downloads
Views
Total views
3,002
On SlideShare
0
From Embeds
0
Number of Embeds
17
Actions
Shares
0
Downloads
57
Comments
3
Likes
3
Embeds 0
No embeds

No notes for slide

Stop Paying Taxes - Irrevocable Life Insurance Trust (ILIT) - Aaron Skloff, AIF, CFA, MBA - CEO Skloff Financial Group

  1. 1. I Want You to Stop Paying Taxes Irrevocable Life Insurance Trust (ILIT) www.skloff.com
  2. 2. Federal Estate Taxes Can Destroy Wealth Year Federal Exemption Federal Estate Tax Rate 2007 $2.0 million 45% 2008 $2.0 million 45% 2009 $3.5 million 45% 2010 Estate Tax Repealed 0% 2011 $1.0 million 55% www.skloff.com
  3. 3. State Estate Taxes Can Destroy Wealth Top State Estate State State Exemption Tax Rate 2009 Connecticut $2.0 million 16% Delaware $3.5 million 16% Illinois $2.0 million 16% Kansas $1.0 million 3% Maine $1.0 million 16% Maryland $1.0 million 16% Maine $1.0 million 16% Minnesota $1.0 million 16% New Jersey $675,000 16% New York $1.0 million 16% www.skloff.com
  4. 4. State Estate Taxes Can Destroy Wealth Top State Estate State State Exemption Tax Rate 2009 North Carolina $3.5 million 16% Ohio $338,333 7% Oklahoma $3.0 million 10% Oregon $1.0 million 16% Rhode Island $675,000 16% Tennessee $1.0 million 9.5% Vermont $2.0 million 16% Washington D.C. $1.0 million 16% Washington $2.0 million 19% www.skloff.com
  5. 5. Beneficiaries of Life Insurance Do Not Pay Taxes, But… Internal Revenue Code Section 101(a)(1) allows proceeds from life insurance to be excluded from taxation for beneficiaries. But… Internal Revenue Code Section 2042(1) includes the proceeds in the decedent's estate. www.skloff.com
  6. 6. Hypothetical Life Insurance without ILIT Insured purchases $5.0 million of life insurance at an annual cost of $52,000. www.skloff.com
  7. 7. Life Insurance Proceeds of $5,000,000 without ILIT Life Insurance Proceeds $5,000,000 Life Insurance Proceeds Included in Estate $5,000,000 Less Federal Estate Taxes at 45% Rate ($2,250,000) Less State Estate Taxes at 19% Rate ($950,000) Net Value $1,800,000 www.skloff.com
  8. 8. The ILIT Removes the Proceeds from the Estate An Irrevocable Life Insurance Trust (ILIT) is a trust that owns a life insurance policy on an insured, instead of the insured owning the life insurance policy directly. Internal Revenue Code Section 2042(2) allows life insurance proceeds inside of the ILIT to be excluded from the decedent's estate. Assets outside of the estate are excluded from estate taxes. www.skloff.com
  9. 9. Life Insurance Premiums as Annual Gifts to ILIT Annual Gifts to the ILIT to pay for the annual life insurance premiums do not count towards each person’s $1.0 million lifetime gift tax exemption. Life insurance premium payments reduce the estate. Life insurance provides tremendous leverage per named beneficiary, as $1 of premium buys significantly more than $1 of benefit. www.skloff.com
  10. 10. Hypothetical Life Insurance with ILIT Insured has four children (beneficiaries) and establishes an ILIT, gifting the annual gift limit of $13,000 per beneficiary (to avoid utilizing any of their $1.0 million lifetime gift tax exemption). The ILIT is able to purchase $5.0 million of life insurance at an annual cost of $52,000 ($13,000 X 4). www.skloff.com
  11. 11. Life Insurance Proceeds of $5,000,000 with ILIT Life Insurance Proceeds $5,000,000 Life Insurance Proceeds Included in Estate $0 Less Federal Estate Taxes at 45% Rate ($0) Less State Estate Taxes at 19% Rate ($0) Net Value $5,000,000 www.skloff.com
  12. 12. Conclusions Federal estate taxes can destroy wealth. State estate taxes can destroy wealth. Life insurance provides tremendous leverage, when comparing premiums to life insurance proceeds. Life insurance proceeds inside of an Irrevocable Life Insurance Trust (ILIT) are exempt from estate taxes. www.skloff.com
  13. 13. Aaron Skloff, AIF, CFA, MBA Chief Executive Officer Skloff Financial Group 908.464.3060 www.skloff.com

×