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**Irrevocable Life Insurance Trusts**
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# Elk Grove Irrevocable Life Insurance Trust Attorneys
## Irrevocable Life Insurance Trust Attorneys in California
### Life Insurance Trusts (ILIT)
Life Insurance is an investment. Like other investments, the value of life insurance is normally included in the total value of an estate when an individual passes away. When the value of an estate exceeds the available estate tax exemption, the excess amount may be subject to a 55% estate tax! Therefore, if an individual has a large life insurance policy, he or she may unwittingly cause a significant tax liability to his or her estate.
In order to avoid having one’s estate pay unnecessary estate taxes, an “Irrevocable Life Insurance Trust”, commonly known as an “ILIT” (pronounced “eyelet”), should be considered. An ILIT is an , which means that once it established, it cannot be undone (revoked). It must be established for the benefit of someone other than the trustor (the person creating it) or the trustor’s spouse.
Most often, the trustor’s children are named as beneficiaries. During the trustor’s lifetime, regular contributions may be made to the ILIT. The contributions will be used to pay for the life insurance policy which is owned by the trust. If structured properly, these contributions will be treated as gifts, but will not be subject to Gift Tax. Upon the trustor’s death, the ILIT will be paid to the named beneficiaries, but will not be subject to any estate tax!
**When Might I Need An Irrevocable Life Insurance Trust?**
LIT’s can be used in a variety of ways to maximize tax-free gifting. Let’s look at a hypothetical historical scenario to see how an ILIT works. Robert worked diligently and saved a substantial sum of money by the time he was 50 years old in 2001. At that time the annual estate tax exemption was $1M. Robert created an ILIT in 2001 with a death benefit of $2.5M, payable to Robert’s three children.
The annual premiums paid to the maintain the insurance policy were paid by Robert and were considered tax-free annual gifts. In 2006, Robert was unexpectedly killed in a sailboat accident. In 2006, the estate tax exemption was $1.5M and the estate tax rate was 46%. If Robert’s insurance policy had been a part of his estate, and the remainder of his estate was worth $1.5M, his estate would have had to pay $1,115,000 in estate taxes! However, because he used an ILIT, the estate’s tax liability was $0.
**How Is An Irrevocable Life Insurance Trust Different From Just Having An Insurance Policy?**
While life insurance death benefits are generally excluded from income tax to the beneficiary, they are included as part of the estate of the deceased if the deceased was the owner of the policy at the time of death. If your estate is close to or already over the amount excluded from estate tax, your estate could have to pay a considerable sum in additional estate taxes if you have a large life insurance policy.
**Is There A Way To Avoid Paying Estate Tax On Life Insurance Proceeds?**
Estate inclusion can be avoided if the owner of the life insurance policy is someone other than the deceased. This assignment must have occurred more than three years prior to the date of death, or the IRS will still consider the deceased as the policy owner for estate tax purposes. The decedent must not have any of what the IRS calls “incidents of ownership”.
If you can control the policy – if you can cancel it, surrender it, borrow against it, pledge or assign it, or can change the beneficiary – you are considered the owner of the policy.
If the policy is owned by an irrevocable trust set up at least three years prior to your death, the insurance proceeds will pass free of estate tax. As noted above, the trust is irrevocable. This means that any decisions you make about the policy are extremely difficult if not impossible to change later.
**Our attorneys can assist you in dealing with probate, trust, and estate law concerns.**  **today to request a consultation**
#### What Our Clients Say
##### Reviews & Testimonials
* > **"Very knowledgeable, wise, and sensitive"**
  >
  > We hired Hannah Myers of Huber-Fox to help us with a recent restatement of our family estate trust. She showed that she is ...
  > **- John M.**
* > **"Very kind and very knowledgeable."**
  > I was referred to you and I'm so glad I was. Setting up a trust can be a very emotional experience. But Hanna and her very ...
  > **- Susan S.**
* > **"Highly recommended."**
  > Personable, knowledgeable and professional, highly recommended.
  > **- Larry B.**
* > **"Very professional, and extremely knowledgeable."**
  > Everyone I dealt with at Hubert Fox was very professional, and extremely knowledgeable. Despite my mother ‘s efforts with ...
  > **- Julie P.**
* > **"Excellent experience."**
  > Excellent experience. We are in another state across the country and the Huber Fox group represented us with the utmost ...
  > **- Perry C.**
* > **"Really Helpful"**
  > The whole experience was a total blessing from God!
  > **- Joyce A.**
* > **"Professional"**
  > Excellent and way professional. Hannah was very informative and took the time to explain in layman's terms all the points of ...
  > **- Dennis M.**
* > **"Definitely Recommend!"**
  > Great experience! We used Austin he was very knowledgeable and professional. Quick in response to our emails or phone calls. ...
  > **- Christine K.**

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**Irrevocable Trusts**
# Elk Grove Irrevocable Trust Attorneys
## Irrevocable Trust Attorneys in California
### Transfer Assets While Minimizing Taxes
**Types of Irrevocable Trusts**
Irrevocable Trusts, such as , Discretionary Trusts, , Residence Trusts, and , can be used to accomplish a variety of goals and objectives. For example, Life Insurance Trusts can be used to ultimately pass large gifts to one’s heirs while minimizing gift and estate tax exposure.
Properly drafted Special Needs Trusts can be great tools to provide supplemental benefits to individuals with special needs without jeopardizing state and federal benefits that individual may be receiving.
**Key Differences**
The difference between a revocable trust and an  is just what the name implies—a revocable trust can be revoked and an irrevocable trust cannot be revoked. While there are great benefits to be gained from the use of irrevocable trusts, they are not for everyone. Once assets are transferred to an irrevocable trust, the assets will be governed by the terms of that trust until the trust is terminated according to its terms.
If you believe that the terms of a trust are the result of fraud, duress, menace, or undue influence, or that the settlor lacked mental capacity to create a trust at the time the trust was drafted, contact us to schedule a free consultation. We will objectively evaluate the facts and circumstances of your case and will give you an honest assessment about your chances of success in a legal action.
**Powers Of Attorney**
# Elk Grove Powers of Attorney Attorneys
## Powers of Attorney Attorneys in California
### Authorizing Emergency Decision-Makers
**What Are Powers of Attorney?**
While the name may conjure up thoughts of fancy attorneys dressed to the nines, a Power of Attorney actually has very little to do with attorneys.
Rather, a “Power of Attorney” is a written authorization giving another individual the right to enter into certain agreements or make certain decisions on one’s behalf. The person named as the “power of attorney” agent need not be a lawyer – in fact, it is typically a family member or friend.
Power of Attorney documents may be used for financial or medical purposes. We recommend that individuals consider setting up Power of Attorney documents for both financial and medical purposes.
Powers of Attorney may be as broad, or as limited as one wishes. Many individuals set up temporary Powers of Attorney before going on prolonged vacations in order to ensure that someone “back home” will be able to handle any emergencies that may come up.
In general, individuals choose to set up comprehensive documents that allow their agents to handle ALL financial decisions. As a safeguard, however, these documents often contain a “springing” provision that requires certification by one or more doctors that the individual is no longer able to manage his or her own financial affairs.
Prior to execution of the certification by the doctor(s), the powers in the document are essentially dormant and cannot be used.
**Who Needs a Power of Attorney?**
We recommend that all individuals consider setting up a Power of Attorney. While most of us are not keen on giving up control over our financial affairs to someone else, the reality is that many of us will one day become unable to manage matters on our own and will need the assistance of a third party.
By setting up a Power of Attorney, you can choose the individual(s) who will act on your behalf when the need arises, rather than being subject to court appointment of your agents.
**If you would like to set a Power of Attorney,**  **to schedule a consultation with one of our attorneys.**