100 Insurers Message Board

Subject: Re: Re: Re: insights wanted

Comments:
: A ILIT is a tax tool that planners use to avoid life insurance proceeds being brought into the estate and taxed. : The individual to be insured funds the trust, and the trust proceeds buys the policy in its own name. In order to avoid legal problems, the insured should never have owned the policy. : The insured in your case, would have paid the $330,000 into a trust account and the trustee would purchase the policy. You said this was done in a single premium payment. I can't imagine why. : : The insured must irrevocably and unequivocally relinquish control over the funds and the policies in the trust. The trust must be set up as a separate legal entity in which the insured has no interest. : The proceeds of a new policy owned by the trust and purchased with money the trustor has paid into the trust will not be brought into the estate because the trustor never had and doesn't have any ownership rights to the trust. These trusts can be good vehicles for avoiding estate taxes if they are set up properly. : It shouldn't seem as if the trust was set up to purchase insurance, but the insurance purchase can be one of the permissable purchases permitted by the trust. : Based on what you said, it sounds like the insurance was purchased before the trust was set up. That's probably the wrong way to do it. As for the old man, if the trust was set up properly and legally, it's irrevocable. : This is not to be considered legal or financial advice. : : : : I just discovered this board today and am impressed by all of the collective wisdom. I am interested in your views on a specific situation: in early 2001 an 87 year old man went to a financial planning seminar. He then entered into a financial planning agreement. Part of the financial plan recommended an Irrevocable Life Insurance Trust. A single premium life insurance policy was purchased with a premium of $330,000. The policy was guaranteed for 5 years with a death benefit of $396,000. At the time, his net worth was just over $1 million, including the value of his home and the value of existing life insurance policies. Now he does not have adequate funds to live comfortably. The financial planners, who also recommended and sold the policy, continue to believe that they provided him a good financial plan and that the policy is a good decision. Thoughts? : : ***It sounds as though there may be some suitability issues. Find out if the gentleman has any written plan provided by the planners. : : If he is a member of AARP, check and see if they have any legal benefits for members. : : If he had the assets to pluck 330k for a policy and then 2 or 3 years later not to be able to handle basic living expenses something doesn't seem right. : : He may want to get a second opinion and contact a attorney. Yet being up there in age the case may last longer than him. : : Who is his beneficiary? : : I don't know what his situation is , but he needs to make sure his Will is up to date, and he needs to look at a Living Will and Durable Powers of Attorney(Health and Financial). If he becomes disabled someone will have to have the power to keep this issue to the fire. : : So basically, have him contact an Attorney. abusing Seniors is a No No in the financial field. : : If the firm doesn't want to help, a phone call to a newspaper or TV station can do wonders. : : Senior Abuse and Identity theft are good stories for the media. Good Luck

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