Last-Survivor Policy Unlike traditional policies, a last-survivor life insurance policy insures two or more individuals (often a married couple), with the beneficiaries often being children or other heirs. Because the policy pays the benefit only after the death of the last-surviving insured party, the premiums are often lower for a last-survivor policy than they would be for the cost of two individual policies. Life Insurance Trust If you anticipate that your assets may be subject to federal and/or state estate or inheritance taxes, you might consider an irrevocable life insurance trust (ILIT). An ILIT could keep insurance policy proceeds out of the taxable estate and provide ready cash to help pay taxes on any estate assets that exceed the exemption amount. You would fund the ILIT, and the trustee would use the money to purchase a life insurance policy that is owned and controlled by the trust. Typically, you would gift additional money to the trust each year, and the trustee would use the money to pay premiums on the policy. When you (the insured) die, the life insurance proceeds are paid to the trust, and the trustee distributes the proceeds according to the terms of the trust. Keep in mind that once the ILIT is created, you cannot change the terms or beneficiaries of the trust, and you must give up control of the life insurance policy. People insured under policies owned by the trust cannot serve as a trustee. All life insurance premiums must be paid by the trust. Life insurance policy Irrevocable trust Proceeds free of estate taxes
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