A very common strategy with ILIT's, is to use your annual gift tax exclusion to effectively remove assets from your estate and the trustee can then use the funds to purchase a life insurance policy for the sole purpose to pay
your federal estate tax bill.
The chief reason is that last - to - die policies provide the liquid funds at the exact time
the federal estate tax bill is due.
Not exact matches
For example, a Heritage Foundation document titled «Time to Repeal
Federal Death
Taxes: The Nightmare of the American Dream» emphasizes stories that rarely, if ever, happen in real life: «Small - business owners, particularly minority owners, suffer anxious moments wondering whether the businesses they hope to hand down to their children will be destroyed by the death
tax bill,... Women whose children are grown struggle to find ways to re-enter the work force without upsetting the family's
estate tax avoidance plan.»
If your
estate is subject to a state death
tax, or it exceeds the 2018
federal estate tax limit of $ 11,200,000, having permanent coverage to help pay the
tax bill is essential for passing your
estate on to your heirs.
Which means that once you've purchased your family the right life insurance policy you should feel free to enjoy a life «guilt free», knowing that in the event of your death, your insurance death benefit will be there, «income
tax and death
tax free» (at the
Federal level if your total
estate is under $ 5,340,000; some states do include a death
tax) unencumbered of any any other
bills or financial obligations!
If your
estate is subject to a state death
tax, or it exceeds the 2018
federal estate tax limit of $ 11,200,000, having permanent coverage to help pay the
tax bill is essential for passing your
estate on to your heirs.