The Lippencott Blog

Irrevocable Life Insurance Trust

Posted at 10:42am on July 19, 2019

An irrevocable life insurance trust (ILIT) can be a useful vehicle to hold life insurance policies outside the grantor’s taxable estate. When an insured owns a life insurance policy on his/her life, the insured controls and has ownership rights over the life insurance, but the policy will be included in the insured’s taxable estate. However, by giving up control and ownership over coverage held within an ILIT, death proceeds may be removed from the grantor's estate, reducing the grantor’s estate tax obligation and providing numerous other benefits.

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Deferred Compensation

Posted at 1:12pm on June 10, 2019

A nonqualified deferred compensation plan is an agreement between an employer and an executive to defer the payment and receipt of compensation to the future for services performed today. The employer makes an unsecured and unfunded promise to pay the amounts specified under the agreement to the executive at some future date. Nonqualified deferred compensation can be utilized in both the employer/executive and the employer/independent contractor context.

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Key Person Life Insurance

Posted at 3:35pm on May 21, 2019

A key employee is generally highly paid, responsible for management decisions, has a significant impact on sales, and has a special rapport with customers and creditors. A key employee may or may not be an owner.

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Private Split Dollar

Posted at 11:40am on April 4, 2019

Split dollar life insurance is not a type of insurance, but rather a method for dividing the premiums, ownership interests, and benefits of a permanent life insurance policy between two parties. There are two basics forms of split dollar taxation: economic benefit regime and loan regime. Split dollar plans may be sponsored by an employer in a work setting, or an individual or trust in a private setting.

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Charitable Lead Trust

Posted at 9:20am on March 17, 2019

A Charitable Lead Trust (CLT) can be an attractive tool for making gifts to family members with little or no transfer tax. The grantor designates a charitable beneficiary to receive annual payments for a period of time, with the remainder interest either reverting back to the grantor or passing to other non-charitable beneficiaries, such as the grantor’s heirs or a trust for their benefit. A grantor can establish a CLT during life or by a Will. Transfers to a CLT may provide income, gift, or estate tax benefits.

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