Choosing the Trustee of an ILIT

This is an Advanced Markets Minute provided by and used with permission from Mutual of Omaha - Advanced Markets

Despite higher exemptions, there are still clients who will face federal estate taxes. An irrevocable life insurance trust (ILIT) is still an effective solution to pay for federal estate taxes. The ILIT is a mainstay in the life insurance industry but selecting a trustee has become more challenging. 

Corporate trustees and banks traditionally served as trustee to ILITs. However, many corporate trustees are no longer willing to serve, at least prior to the death of the insured. This is particularly a problem when an ILIT only holds a life insurance policy or there isn’t an existing relationship with the insured.  

Some of the duties that a trustee of an ILIT must perform while the policy is in force include the following: 

• Timely payment of policy premiums 
• Create and send annual Crummey Notices to beneficiaries
• Management of Split Dollar Arrangement (if applicable) 
• Annual insurance policy review 

Because trustee duties involve administrative duties, fiduciary obligations and a good understanding of life insurance, it is prudent to employ a trustee that is experienced in administering ILITs. But if trust companies and banks are not willing to perform these duties, who is? 

Often family members or other professional advisors are asked to be the trustee of an ILIT. Family members are familiar with family dynamics and may know more about a family member’s history and specific needs which can make administering trust distributions a little easier. A professional advisor such as an attorney or CPA may be more familiar with the tax and legal requirements associated with an ILIT. So a good solution when you can’t find a corporate trustee or bank might be a team approach.  

Maybe the client appoints a relative or friend as the trustee and allows them to hire professional advisors to work with them. The professional advisors could handle the yearly notices; administer split dollar plans or gift tax filings, if necessary, along with policy oversight and review. This approach to trust administration may solve a client’s problem with finding a trustee willing and able to perform the important duties of managing the ILIT. 

Contact Partners Advantage for complete Advanced Markets assistance at 

888-251-5525, Ext. 700

For financial professional use only. Not for use with consumers.

This is for informational purposes only.  Recommendations for financial product or financial strategies must be suitable for the individual based on their circumstances. Mutual of Omaha does not give tax advice.

The advice provided in this communication is not intended or written by the practitioner to be used and may not be used by you for the purpose of avoiding penalties that may be imposed by the IRS or any other taxing authority.

The advice in this communication was written to support the promotion or marketing of the transaction(s) or matter(s) addressed by the written advice.

You should seek advice based on your particular circumstances from an independent tax advisor.

IUL: Cost Is An Issue Only In The Absence Of Value

Charlie Gipple has been showing financial professionals across the country why IUL policies aren't expensive if they're designed correctly. He can also help show you how to explain it to your clients in a way they will understand.
Join Charlie for a complimentary webinar on Tuesday, September 27 at 2pm EDT to discover how to design cost effective IUL policies. After the webinar, you'll now how to...

• Overcome the blanket statements made by television/radio financial personalities about permanent insurance being too costly
• Walk your clients through a hypothetical scenario and show them that IUL policies can be quite reasonable in price
• Show your clients tax advantage opportunities IUL policies offer 

REGISTER NOW

PLUS: Webinar attendees will receive the complimentary white paper:

IUL: Cost is Only an Issue in the Absence of Value

For Financial Professional Use Only. Not for use in solicitation or advertising to the public.

Indexed Universal Life is not a stock market investment and does not directly participate in any stock or equity investments. Market Indices do not include dividends paid on the underlying stocks, and therefore do not reflect the total return of the underlying stocks; a market-indexed insurance product is not comparable to a direct investment in the equity markets. Clients who purchase IUL are not directly investing in a stock market index.

Pursuant to IRS Circular 230, Partners Advantage Insurance Services and their representatives do not give tax or legal advice and cannot be used to avoid tax penalties or to promote, market, or recommend any tax plan or arrangement. Encourage your clients to consult their tax advisor or attorney.

The information contained in this article is not intended to serve as tax or legal advice and is not intended to provide financial or legal advice and does not address individual circumstances.

Indexed universal life insurance policies contain fees and expenses, including cost of insurance, administrative fees, premium loads, surrender charges and other charges or fees that will impact policy values.

Both loans and withdrawals from a permanent life insurance policy may be subject to penalties and fees and, along with an accrued loan interest, will reduce the policy's account value and death benefit. Assuming a policy is not a Modified Endowment Contract (MEC), withdrawals are taxed only to the extent they exceed the policy owner's cost basis in the policy and usually loans are free from current federal taxation. A policy loan could result in tax consequences if the policy lapses or is surrendered while a loan is outstanding. Distributions from MECs are subject to federal income tax to the extent of the gain in the policy and taxable distributions are subject to a 10% additional tax prior to age 59½, with certain exceptions.

These characters are fictional and are not actual customers. Your own decisions should be made in light of your own financial situations. The hypothetical examples used are for illustrative purposes only, is no guarantee of return or future performance, and does not depict the actual performance of a specific product or its investment options.

60016

Critical Updates Impacting our Industry

Big changes are taking place in our industry right now, including dropping rates, commission changes, economic and regulatory issues. 

You need to know the what, why and how it impacts you and your clients! If you missed our critical updates call on August 26, please call the Partners Advantage Brokerage Team for updates on these important changes:
888-251-5525, Ext. 700

Listen to the replay of the August 26 critical industry updates here. This 30-minute call replay provides some very important product, carrier and industry updates

For financial professional use only. Not for use with consumers.

64564

Expand and Diversify with Life Insurance

If your answer is YES, Partners Advantage would like to help! Whether you have a vast life insurance “back office” or no back office at all for life insurance, we have the infrastructure that can help you build your life insurance business. Now is an important time to diversify.

We can help you add Single Premium Life Insurance, Indexed Universal Life Insurance, Whole Life, Term and other attractive products to your stable of offerings; products which can be a strong fit for your financial professionals and their client base.

Plug into resources and experience that can allow you to bring life insurance sales and opportunities onboard now!

• Access to industry leading life insurance carriers and products
• In-house underwriting team to help place cases more quickly and smoothly
• Advanced markets specialist for complex cases
• Training and sales ideas to empower your team
• Staff support and technology to help smooth out the process

Choose from our Platinum or Premier platforms. We have options tailored to fit most agencies. If you’re looking for an enhanced business growth strategy, succession plan or considering selling your agency, we can help.

We can provide you with access to more highly sought-after carrier relationships and most of the top insurance carriers in nation. Partners Advantage has done more than $150 million in life premium and more than $3 billion in annuity premium the past three years. Your agency can benefit by leveraging the value we bring to you and by being a part of our network.

Learn More About Opportunities for Your Agency.

Contact Us at 888-251-5525

Scott Tietz, CEO, Ext. 103 • James Wong, President, Ext. 110

Charlie Gipple, Senior VP, Ext. 358

For financial professional use only. Not for use with consumers.

Indexed universal life insurance policies contain fees and expenses, including cost of insurance, administrative fees, premium loads, surrender charges and other charges or fees that will impact policy values.

Keep in mind that most life insurance policies require health underwriting and, in some cases, financial underwriting. Each case is individually underwritten as the severity of medical conditions varies among individuals. Formal underwriting evaluation and pricing is based on the individual characteristics of each case.

63847