Is Your Client’s ILIT Obsolete?

April 1, 2010Articles Life Insurance Selling

Whether doomed from the start or a victim of changed circumstances, it’s not unusual to find that a client’s irrevocable life insurance trust (ILIT) doesn’t work anymore.

Sometimes it makes sense to retain the insurance policy even when the trust itself is a problem. In these cases, you can often sell the policy to a new trust, an option that is sometimes overlooked. As long as you structure the sale to avoid negative estate, gift and income tax consequences, a sale can be a home run for the client and an indirect score for the insurance professional, who retains an attractive insurance policy while replacing the obsolete trust that holds it.

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