Nov 1, 2010 12:00 PM

For some insureds, legislative uncertainty doesn't require much of an adjustment to funding their irrevocable life insurance trusts; for others, it's time to consider alternatives

By Melvin A. Warshaw

The estate and generation-skipping transfer (GST) tax will reappear in 2011. For some insureds and the trustees of their irrevocable life insurance trusts (ILITs), the reinstatement of the estate and GST tax laws in 2011 should have little impact on how their ILITs are funded in 2010. But for other insureds and their ILIT trustees — particularly those in which an insured's intent is to preserve the fully GST tax-exempt status of his ILIT when the GST tax law reappears in 2011, funding in 2010 will present some unique challenges. Until there's clarification of how the GST tax law will be applied in 2010, there are several alternatives an insured can consider for funding his premiums, including making a loan to an exempt ILIT. Let's look at the development of the GST tax and explore potential premium funding strategies for 2010.

The GST tax applies to direct and indirect transfers made during the life, or as a result of the death, of a “transferor” that are made to a person who is two or more generations younger than the transferor (also called a “skip person”). For example, if a grandparent makes a transfer to a trust for the benefit of his grandchildren and the trust excludes children as beneficiaries, the grandparent will have made a transfer that is a “direct skip.”

Topics of Interest

Estate Tax	Donor Advised Funds
GSTs	Family Offices
Private Foundations	Life Insurance
2010 Tax Act News	Industry Trends Surveys

E-Newsletter Signup

Poll

Topics of Interest

Estate Tax	Donor Advised Funds
GSTs	Family Offices
Private Foundations	Life Insurance
2010 Tax Act News	Industry Trends Surveys

E-Newsletter Signup

2011 Trust Glossary

Click here to download the 2011 Trust Glossary

50 Years Ago This Month

Click here to read the issue.

50 years ago, in May 1962, we featured articles such as: "Future of Canadian Trusteeship" by Arthur H. Mingay", "Training Trust Employees" by Ian M. Marr, "What is a Trust Officer?" by Eric J. Brown, and "Selling Services" by Donald I. Webb.

Conrad Teitell's Guide to Tax Benefits For Charitable Gifts

Click here to view the most up to date guide (September 2011)

Press Releases