An irrevocable life insurance trust can exclude the proceeds from a life insurance policy from estate taxes in Florida. This type of trust can be particularly beneficial to those who are wealthy. Here are some of the benefits of having an irrevocable life insurance trust.
Minimizes estate taxes
When individuals are engaged in estate planning, one concern is the amount of state taxes that their beneficiaries will have to pay. This is why they might choose to utilize an irrevocable life insurance trust. A life insurance death benefit isn’t considered a part of the insured’s estate, and the beneficiaries won’t have to pay state or federal estate taxes on the money that they receive.
No effect on government benefits
Some beneficiaries may already be receiving some sort of government aid such as Medicaid or Social Security benefits. Since these types of benefits are often based on income, many individuals worry about getting life insurance benefits. However, an irrevocable life insurance trust protects them from this as they can control their distributions out of the trust so that they won’t affect their eligibility to continue receiving government benefits.
The beneficiary has a lot of control
A lot of individuals choose to take advantage of an irrevocable life insurance trust because it allows the beneficiary to have a lot of control. They can choose to have it paid out immediately, or they can wait until they need the funds at a later date. This is particularly beneficial for those who have remarried but worry about the financial protection of minor children.
Many individuals find that there are a lot of benefits of utilizing an irrevocable life insurance trust. If you’re interested in creating one, an attorney may help you determine whether or not this type of trust will meet your needs.