So, if I understand correctly, the only way to make the death benefit not be included in your estate is to have it owned by an irrevocable trust? Can the beneficiary be your kids, or must it also be the trust?
Yes, usually Premium Finance polices are held in ILIT(Irrevocable Life insurance Trust) not only does it not get included in your estate, but it is also protected from creditors. If your DB gets paid out to an estate(Dont know why anyone would do this..) and the said estate do get inherited, you are liable for estate, inheritance taxes(minus exemptions if any). If you, lets say name your child as a sole beneficiary, there is no tax liability. Hope this helps!
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So, if I understand correctly, the only way to make the death benefit not be included in your estate is to have it owned by an irrevocable trust? Can the beneficiary be your kids, or must it also be the trust?
Yes, usually Premium Finance polices are held in ILIT(Irrevocable Life insurance Trust) not only does it not get included in your estate, but it is also protected from creditors. If your DB gets paid out to an estate(Dont know why anyone would do this..) and the said estate do get inherited, you are liable for estate, inheritance taxes(minus exemptions if any). If you, lets say name your child as a sole beneficiary, there is no tax liability. Hope this helps!