2007-04-13 09:52:44 - What is Irrevocable Life Insurance Trust or 'ILIT-? What are its benefits? Shawn Christopher, an attorney licensed in Nevada and California, discusses Irrevocable Life Insurance Trust ('ILIT-), its benefits and things to consider in implementing it in this article.

By Shawn Christopher An Irrevocable Life Insurance Trust ('ILIT-) is a trust which owns life insurance policies. Generally, life insurance proceeds are included on your estate for federal estate tax purposes. Depending on the size of an estate, there may be federal estate taxes due upon death. If the ILIT is established and operated correctly however, the insurance proceeds .

Options to cut taxes on estate

I am 50, and I'm concerned about avoiding estate taxes on two fronts. I want my parents' money to stay in the family, and I want my money to pass to my children. Many couples between 50 and 80 who live on Long Island have $1 million to $4 million in assets. Let's face it: If you own a home, have some life insurance, IRAs and a 401(k), you are a millionaire. There's a heavy federal tax on everything above the first $2 million of your estate. What's the best way to avoid this tax? More important, the federal law expires in 2010. If we revert to the old law, a much smaller amount will be sheltered. Your recent articles seem to play down the value of living trusts. Wouldn't these be of use here? What other vehicles can a person use to avoid estate taxes if he wants to control his funds until he dies instead of gifting them away?

D.N., Massapequa



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Reform vs. Repeal: The Estate Tax Battle Takes a New Turn

Across the board, it appears that the life insurance industry supports reform, rather than repeal, of the estate tax. Late last month, the Senate received votes on the estate tax issue and some industry experts are suggesting that these votes will move us toward more of a reform position and away from the repeal. As it stands, the federal government passed the Economic Growth and Tax Relief Reconciliation Act of 2001, which would completely eliminate estate taxes for a year in 2010. If Congress fails to act before the expiration date, the estate tax exemption will fall, and the maximum estate tax rate of up to 55% will be reinstated starting 2011 on estates of more than $1 million. According to Responsible Wealth, a national poll showed 57% of American millionaires prefer to keep the tax as is or simply reform.

Estate tax humor plays on foggy future

NEW YORK (Dow Jones/AP) We can help! Our team of experts will guarantee that you pass away in 2010 and avoid federal estate tax. Gallows humor about estate taxes like this Internet spoof is in vogue these days because changes in the so-called death tax have left even savvy financial planners puzzled. Meanwhile, the hope of a total repeal is now dim because of the shift in power to Democrats in Congress. By far the most important estate-planning issue faced by clients and planners alike is the future of the federal estate tax, said Jeffrey A. Baskies, a partner in the Fort Lauderdale, Fla., office of law firm Ruden McClosky. The nearly century-old levy has meant heirs can see as much as half of their inheritance go to the Internal Revenue Service. A 2001 law phased in a series of changes in the tax.

Schools adjust budget proposal

The Albemarle County School Board may have to eliminate an additional $1.2 million from its budget proposal after the county Board of Supervisors set the real estate tax rate at 68 cents per $100 of assessed value, according to preliminary figures released Thursday by the school division.

The middle school orchestra program and non-European language classes may be impacted the most, as Superintendent Pamela Moran recommended Thursday that the School Board cut the programs along with five others to balance the school budget.

In all, the School Board has had to reduce its initial budget proposal by $3.8 million, according to most recent projections.

Jackson Zimmerman, director of fiscal services for the schools, said that figure likely will increase or decrease, depending on finalized funding from the state and local government.