This blog post will provide five simple financial advisor business plan ideas to serve clients faster and smarter around non-core items. This post will cover:
You are the financial thought leader and implementer for your clients. Working collaboratively with an estate trust attorney on your client estate legal issues can be daunting. Here are a few tips where you remain the financial thought leader when dealing with an estate attorney.
This blog post addresses two audiences on estate planning for millennials: (1) financial advisors; and (2) millennials themselves. The information came from an August 2020 presentation Wealth Advisors Trust Company gave uber-successful Millennials wanting to learn the ABCs of estate planning in 15 minutes. Advisors will learn how to serve/prospect to millennials with a broader scope and understanding. Millennials will learn how to think thru the philosophical complexities of estate planning around their wealth and family. This post will include:
The purpose of the Irrevocable Life Insurance Trust Creating an estate plan can be as easy as 1-2-3 or as complex as the science to send a man to the moon.
In this blog post you are going to learn ideas and suggestions to potentially limit the “hit” from Joe Biden’s tax plan. This post will include:
A Life insurance trust holds a life insurance policy.
At the death of the creator, it will pay out a death benefit. In order to receive the death benefit, the owner of the policy must pay a premium. A life insurance policy that is already previously held by the grantor can be transferred to the trust to create a life insurance trust. Once the policy has been created and is held by the trust, it is no longer included in the individuals gross estate. Life insurance trusts are a great vehicle to protect from debtors and creditors.
So, what happens if you decide to terminate life insurance trust, or need to make changes to the life insurance trust? One easy way to terminate a life insurance trust, the grantor to stops making the premium payments, known as gifts, to the trust. If the grantor stops making payments to the trust, then the policy will lapse. This causes the purpose of the trust to be eliminated. If you are looking to making changes to the life insurance trust rather than terminating, there are a few options.
The three most common ways to change a life insurance trust are:
Decanting
Non-judicial Settlement Agreement
Transferring an ILIT
When an Irrevocable life insurance trust is created, it is sealed and the material of the trust document cannot be changed. Oftentimes, trusts that were created a long time ago do not have the proper language implemented to reflect the situations of today. Decanting a trust is typically done when there is an irrevocable trust that is difficult to amend or revoke. Decanting a life insurance trust is similar to upgrading to a new phone, but not erasing the content of the old phone. In the terms of the trust, you are upgrading unhelpful provisions of a trust, but not changing the interest of the beneficiaries of the original trust. Decanting can be useful for a number of reasons. For example, creditor protection. If a beneficiary is set to receive the proceeds of a trust at a certain age, the distributions could be subject to creditors. However, if the trust is decanted, the new trust terms could extend, and the assets would be preserved from the creditors. South Dakota has ranked #1 for the last 6 years for their decanting statutes.
Generally, if you are wanting to change the contents of the life insurance trust you might have to jump through a few hoops to get there. This can make the process expensive, and long, especially if you have to go to court. Depending on the state, you might have an option to use a non-judicial settlement agreement. A non-judicial settlement agreement is a way to modify or address issues in trust that might need to be change or are silent. One important factor to note is not every state statutes is created the same. States like South Dakota, allow interested parties to use a non- judicial settlement agreement to make changes to the trust. For example, if a beneficiary of a life insurance trust lives in a high tax state, then they can have their assets depleted by Uncle Sam. They governing law might state that the life insurance trust must be administered in the state that it resides, and this can make the beneficiary feel stuck. The good news, if that state has statue granting them to use a non-judicial settlement agreement, then they can potentially change the governing law to a more tax friendly state like South Dakota.
There are certain circumstances where a old trust can be merged into a new life insurance trust, but it is limited and requires a special legal document. An option more common is for a new life insurance trust to be created which fixes any problems and have it purchase the policy. The policy can be sold at its fair market value. Since the policy is never owned by the insured, there is no issue with the inclusion rule, and the death proceeds avoid paying the estate tax. It is important to understand that the transfer of the life insurance trust must meet certain exceptions to keep the proceeds free from paying income tax. Transferring the life insurance trust might be a better option than terminating the trust and paying a termination fee.
Today's life insurance market place is complex and ever changing. This is a big reason why less and less corporate trustees are interested in managing life insurances trusts. Sadly, the few that are willing, often administer life insurance trusts poorly. This serves as a disadvantage when a beneficiary wants to make a choice. Usually, if a beneficiary wants to take an immediate distribution of the death benefit of the life insurance trust, they will have to pay a termination fee. These fees can range from 1% up 3% of the death benefit of the life insurance trust. Some trustees use this as a way to keep you invested. It is important to understand what the termination fees might be for your corporate trustee to make the best decision.
What is a trust? A trust is a legal entity to which an individual titles property and assets for the benefit of another. Every trust contains a grantor, family trustee, and beneficiary. There are many different types of trusts to choose from. (more…)
Perhaps you are a Washington resident and the thought of using an outside fiduciary is unappealing. Using an outside fiduciary can offer a risk, but also considerable benefits. Creating a trust is an important step in protecting assets and providing for future beneficiaries. Learn the difference of how Washington compares to trust havens like South Dakota.
In this post you are going to learn the secret sauce to picking a trustee and learn of America's most advisor friendly trust companies for 2020. Botton line - the best trust companies treat financial advisors like celebrities.
This post also includes lots of:
So, if you want to get GREAT results during your search for picking an advisor friendly trust company, then you will love this post.
Let's dive right in.
