How Advisors Handle Your Life Insurance Inside a Trust
The Financial Advisor Podcast with Fexingo: Working with Planners, Fiduciary Duty, and AdviceShow Notes
We examine the specific mechanics of using life insurance within an irrevocable trust to manage estate taxes. Lucas walks through the liquidity crunch that occurs when premiums are paid from outside the trust, and why the Internal Revenue Service scrutinizes these arrangements under the thirty-six month rule. Luna challenges whether this strategy still makes sense when the federal estate tax exemption sits at twenty-three million dollars per couple. They discuss the concrete risks of policy lapse, the importance of selecting the right insurer, and how advisors structure ownership to keep proceeds out of your taxable estate while avoiding the gift tax traps that catch many high-net-worth clients.
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