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LINK DIVERSIFIED SERVICES INC.
WHEATON, ILLINOIS
630.871.0070
800.323.0133
What Is An Irrevocable Trust?
One of the most important estate planning tools ever devised is the Irrevocable Trust. Here are some facts and comments about these trusts from the just-updated book, The New New Book of Trusts: Think of a trust as a box into which you can put all types of assets. A revocable trust is like a “box with a string on it.” By “pulling the string,” you can recover the property you placed into the box or change the terms of the agreement you initially set up. If you “set up the box without a string” or if you “cut the string” your trust becomes irrevocable. You can no longer reach in and get back the assets you put in. Nor can you unilaterally change the terms of the trust. The term “irrevocable trust” usually describes a “living” or “inter vivos” trust created during the lifetime of the grantor (the person who creates and funds the trust)
InfoLink is published monthly to provide accountants with the financial and insurance information they need to make smart business decisions. We welcome your comments and questions. E-mail lds@linkds.com or fax (630) 871-0198.
Securities offered through World Equity Group, Inc. 1650 N. Arlington Heights Rd., Suite 100, Arlington Heights, IL 60004, Member NASD/SIPC.
that cannot be revoked, altered, amended, or terminated by the grantor.The grantor transfers legal title to property to the trustee who holds legal title to the property placed into the trust. The trustee is responsible for administering that property for the benefit of the trust’s beneficiary(ies). Which strings you keep—and how many—will have a direct impact on whether or not you will be taxed on the trust’s income and whether or not trust assets will be included in your estate for federal
and state death tax purposes. If you are looking “to control the timing and conditions under which my beneficiaries will use your gift” or to save taxes, irrevocable trusts might be right for you. First, the federal gift tax annual exclusion allows you to give $11,000 (increased from time to time for inflation) each year to as many different people as you like (or $22,000 if you are married and your spouse agrees to “split” the gifts for gift tax purposes). Once you give it away, it can’t be taxed.
When your estate exceeds the “unified credit exclusion equivalent” ($1,000,000 in 2002 and scheduled to increase to $3,5000,000 by 2009), the excess is subject to tax rates from 37% up to 50%. For someone with an estate potentially subject to federal estate tax, each $11,000 gift currently may save about $4,000 in estate tax. Also, shifting income-producing assets from high income taxpayers’ brackets to low-income taxpayers can result in the income being taxed at much lower rates. Life insurance can be transferred during lifetime to a trust with very little “cost” in terms of taxes or loss of financial security, and yet save tremendous amounts in federal estate tax and state death taxes. If life insurance is purchased and owned by an irrevocable trust, the proceeds can be applied for the benefit of your family or other beneficiary after your death, free of any federal or state death taxes.
ACCOUNTANTS: CONTINUING EDUCATION CREDITS
Link is hosting a seminar on June 26 at the Hyatt-Lisle that will qualify you for continuing education credits.
Financing Life Insurance Premiums | Stock-to-Cash Programs | 412i plans
If you are interested in attending this seminar and would like to reserve seats, please call Mike Cellini at (630) 871-0070 for more information.
1749 S. NAPERVILLE ROAD WHEATON, IL 60187-8132 800-323-0133 Fax 630-871-0198 Securities & Advisory Services offered through World Equity Group, Inc.
ING INU N NT CO CATIO EDU EDITS ar CR Semin
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CONTINUING EDUCATION CREDITS SEMINAR
Financing Life Insurance Premiums Stock-to-Cash Programs 412i plans
June 26 Hyatt-Regency, Lisle, IL 8 am breakfast 8:30 - 11:30 am seminar Q & A session to follow
Call Mike Cellini at 630-871-0070
Your Link to the future...today and tomorrow!