One of the most appreciated techniques in higher level financial planning involves the use of life insurance as a tax reduction or wealth replacement vehicle. Still, our experience has been that some of the more every day aspects of using this valuable tool are often misunderstood, overlooked or unappreciated. Additionally, it is unfortunately the case that many clients are underserved by advisors who offer only self-interested and fragmented advice because they do not embrace the enormous importance of having financial, accounting and legal professionals working together in order to successfully implement the life insurance based aspects of a plan.
Some of the more important questions any competent practitioner needs to be able to answer are:
• Why is a life insurance trust a “gift with strings attached”
• What is the purpose of a “Crummey Notice” and why do we have them?
• What are the most common reasons for putting life insurance in a trust?
• What is a “5 and 5” limitation, and why is it essential that I know?
• What is the “3 year rule” and how can it be important to the client - and to you?
• What are the mechanics of establishing a life insurance trust? What can (and often will) go wrong?
• Why is it that many competent practitioners never recommend anyone but an institutional trustee for life insurance trusts?
• Which is better, a single life policy or a joint policy - and why? Does it matter what sort of trust owns these policies?
• What are some of the drawbacks of and alternatives to traditional life insurance trust based planning?
• What are some of the warning signs that my client’s life insurance planning is not in proper order?
Please join us on Thursday, July 19, 2007 at 7:30 a.m. for a discussion of all of the above topics, as John Donaldson and I explore the good, bad and ugly of life insurance trust based planning:
“Team Thinking and the Irrevocable Life Insurance Trust”