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MORE ON LIFE INSURANCE TRUSTS

March 21, 2007

Death and Taxes continues with its series on life insurance trusts today. It's all worth reading; here's a highlight:

The biggest mistakes I see with ILITs are:

(a) the failure of the grantor to understand that he or she no longer owns or has any interest in the property;

(b) the failure of the grantor to understand that "irrevocable" means "can't amend or revoke"; and

(c) the failure of the trustee to continue to administer the trust correctly, by preparing income tax returns, by sending notice of each contribution to beneficiaries, and by keeping good, clear records of what has been done.

Irrevocable means "you can't revoke." It's amazing how many people have trouble with that.

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