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Everybody must require insurance since it will prepare you for the day when you become an older person and unable to do work. Therefore, everyone should prioritize having insurance when you build families and becoming older. Irrevocable Life Insurance Trusts (ILITs) are trusts created in Arizona that are intended to safeguard and manage permanent life insurance for the duration that the holder is living.
It is essential for individuals and families to get the ILITs; visit the website for more details. Understanding ILITs is a very complex one, as it requires a grasp of the legal process. In light of this, we will provide you with knowledge of Irrevocable Life Insurance Trusts in Arizona.
Keys & Concepts Of ILITs
Irrevocability
Once the trustee was established by the grantor, an ILIT cannot be altered or canceled. This ensures that the life insurance proceeds do not increase the grantor’s taxable estate.
Life Insurance Component
The grantor is entitled to permanent life insurance based on the policy of the insurance that the grantor applied for. The trust receives the policy proceeds upon the grantor’s passing.
Trustee
An ILIT normally has a trustee to secure their assets and administer the distribution of the agreement. The trustee was appointed by the grantor, which includes a family member, friend, or professional confidant.
Beneficiaries
When the grantor passes away, the profits from the life insurance policy are supposed to be distributed to one or more beneficiaries listed in the ILIT. Relatives, charitable organizations, and other organizations may be beneficiaries.
After listing the key concepts of ILITs, we will now discover the advantages of having ILITs. Here are the benefits:
Advantages Of Arizona ILITs
Estate Tax Reduction
Having an ILIT will reduce the cost of your estate tax; therefore, your life will be at ease without worrying about paying tax or your real estate. It would pave the way to making your wealth richer together with your family. The life insurance proceeds are taken out of the grantor’s taxable estate by ILITs, which helps lower the possibility of estate tax obligations.
Creditor Protection
When it comes to your debt, the creditor would not bypass your account if you have ILITs in that asset. Thus, your asset would be shielded from credit from both the grantor and the beneficiaries. However, other bank accounts or assets that are not subject to the ILITs will be accessed by the creditor. Likewise, it is actually fine because other assets that are applied by ILITs will be protected, and you will never go to zero, especially your beneficiaries.
Provides Privacy
ILITs are far more secure than other asset protections since they are private documents. And it offers very secure confidentiality for the grantor, trustee, and beneficiaries. Wherein others will not go through to probate the asset that has ILITs, it is only exclusive to the selected person to know.
Control
By appointing the trustee and setting the terms for allocating trust assets to beneficiaries, the grantor retains some degree of control over the ILITs. The grantor would control the asset more than the trustee or beneficiaries, which would give them the power to divide and separate the asset. It will also benefit the members to preserve wealth since the grantor is wise to maintain the asset’s profit.
Conclusion
Summing up, Irrevocable Life Insurance Trusts (ILITs) are a powerful tool for Arizona seeking asset protection, preserving the wealth of the family, and minimizing taxes. Thus, it is essential that you have this trust for your future to be secured. However, consulting a professional lawyer would be the best move in applying for the trust.
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