Forming an effective estate plan requires proper accounting of your assets. For some people, this may include a life insurance policy. Making proper arrangements for the distribution of these funds after your passing is essential, especially since these policies can be incredibly valuable. Forming an Irrevocable Life Insurance Trust is one way of transferring these assets to another party free from taxation. As a knowledgeable trust attorney can further explain, this strategy has many benefits, such as avoiding the complexities of probate. To learn more about Wake Forest Life Insurance Trusts, reach out to legal counsel.
Forming a Trust is a popular way to transfer property to other parties. One reason for this is the fact that this property does not need to flow through the probate process. This means that the transfer can be instantaneous and is unlikely to experience court interference. Creating a Trust does not need to be complicated. According to North Carolina Revised Statutes § 36C-4-401, the creation of a Trust requires only the nomination of a trustee, naming of a beneficiary to receive property, and placement of property into the care of the Trust. In the case of Irrevocable Life Insurance Trusts in Wake Forest, this property is a person’s interest as a beneficiary in a life insurance policy. Once property enters a Trust, a probate court can no longer touch it. This helps to avoid common issues such as disputes over the terms of a decedent’s Will. A local attorney with experience in Irrevocable Life Insurance Trusts can further explain how these estate planning tools function outside of probate.
For many people, a large percentage of their assets may be tied into a life insurance policy. It is not uncommon for these policies to pay out out hundreds of thousands of dollars, if not millions, upon the holder’s death. Because of this high value, a person’s estate become vulnerable to taxation. North Carolina does not have an estate tax. However, the federal government may still take a portion of an estate that rises to a specific value. According to the Internal Revenue Service, estates with a value of at least $11,700,000 in 2021 must pay taxes to the federal government. Fortunately, creating an Irrevocable Life Insurance Trust helps avoid this potential complication. As soon as a party places property into a Trust, it is no longer theirs. As a result, the value of the person’s estate is lowered, potentially protecting the assets from taxation. An attorney in Wake Forest could help to craft Trusts that limit potential tax liabilities on a life insurance policy.
There are many benefits of creating an Irrevocable Life Insurance Trust. Beyond avoiding probate and potential estate taxes, these tools are flexible and can be crafted to fit your specific needs. To learn more about Wake Forest Irrevocable Life Insurance Trusts, speak with a well-practiced lawyer at our firm. Contact us today to set up an initial strategy meeting and discuss your estate planning goals.