ILIT funding: Do I transfer my existing life insurance?

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PostPosted: Sun Jan 24, 2010 3:00 am   Post subject:   

The ILIT is not subject to the 3-year contemplation of death if the application states the owner will be the ILIT without specifically naming it (since it doesn't exist yet, obviously). As long as the owner is changed to the specifically named ILIT before the policy is issued and signed for, it should be fine. Most people looking for second-to-die for estate planning policies will set up an ILIT despite the cost because they need it even if the insurance comes back more expensive than intended. Very few people will decline to take the coverage, most will just take a lower amount to fit their budget if the underwriting is worse than projected. You would have to have two VERY unhealthy people to have both be declined....even people who would be declined on their own can still get coverage on second-to-die depending on the health of the other person.



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PostPosted: Sun Jan 24, 2010 3:33 am   Post subject:   

Quote:
Once you'd get a new life insurance, then it's original application is supposed to get signed by your ILIT trustee.




I don't think it can happen this way. All the required signatures happen before underwriting and policy issue, not afterwards.


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PostPosted: Sun Jan 24, 2010 2:53 pm   Post subject:   

dgoldenz, I don't understand what you are saying. The application must be signed by the owner. If the ILIT is going to be the owner, one can't just state that the ILIT will be the owner.



Lots of time if the underwriting comes back worse than expected, the ILIT may not make sense. For instance, let's assume that we're using a Guaranteed UL policy. We expect it to be issued Standard + and as such, it works out to be a 6% return if the insured(s) live another 20 years. The policy may come back Table B and at 20 years, it comes out to a 4% return. It may then make more sense to gift the money, but invest it instead of buying life insurance.



As an aside, in most circumstances, I'd rather see the insured's get two separate policies for half the amount than one 2nd to die policy. If there is a decent amount of time between deaths, this can lead to there being far more money.

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PostPosted: Sun Jan 31, 2010 8:02 pm   Post subject:   

Sorry it took me so long to respond to this, haven't been on here in a bit.....the application is completed by the insured with the beneficiary as "to be placed in trust", and then after the ILIT has been set up and the policy is ready to issue, a new application citing the ILIT as the owner and beneficiary is completed and sent in. This allows the underwriting to be completed while the ILIT is set up and avoids the problem of the 3-year contemplation of death rule.



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PostPosted: Sun Jan 31, 2010 10:59 pm   Post subject:   

dgoldenz, makes perfect sense. Thanks for the clarification.

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PostPosted: Mon Feb 01, 2010 9:41 pm   Post subject:   

No problem.



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PostPosted: Mon Jun 21, 2010 3:44 pm   Post subject: ILIT Management  

Also make sure that the ILIT Trustee has all of the tools needed to lawfully carry out their duties to the grantor, the beneficiaries, the law itself. Many Trustees struggle to take care of the demanding job that faces them, and are barely equipped to deal with the personal liability they'd face if things really go awry.



**Edited by dgoldenz for spam**


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PostPosted: Tue Jun 22, 2010 2:20 am   Post subject:   

And I'm sure if people are doubting their trustee's ability to do his or her job, the trust company you work for would be more than happy to step in for a small fee.

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PostPosted: Tue Jun 22, 2010 7:41 am   Post subject:   

Choosing a third-party trustee can be a wise decision. They should have the ability to approach specific situations impartially and without all the drama that could be imposed on a person with closer ties to the trust or its beneficiaries.



One problem that used to plague some trusts which were initially established through a local "community bank", where the grantor and the trustee had a personal relationship, was the acquisition of the smaller banks by their greedy national competitors, and the loss of personal service that resulted. It often made it impossible for the beneficiaries to change trustees before they did actual harm to the value of trust assets.



The most important thing about life insurance trusts is the timing and method of placing the insurance in the trust. As several have pointed out, the best plan is to make the trust the owner at the time of application so there is no doubt about the intent concerning ownership. Outside that, the three year lookback rule could be the inspiration for a real-life "Weekend at Bernie's" event.



Kind of like the two guys who wheeled their dead friend in an office chair to a Social Security Office in NYC a couple of years ago in a fraudulent attempt to collect his check. When the SS Rep asked where the recipient was, they said, "Oh he's outside, 'cause he's not feeling too well." Unfortunately, by that time a small crowd had gathered around the dead guy because he was about to fall out of the chair, with his pants down around his thighs (the two knuckleheads couldn't figure out how to dress the corpse properly), and it was apparent that he was dead.



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PostPosted: Sat May 25, 2019 12:04 pm   Post subject: היי  

?היי יש לי לקוחות חדשים בשבילך יכל לעניין אותך


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