By Ken Tarbous
February 17, 2012 02:21 PM
Death taxes seem to come and go, and to adapt to the rises and falls in rates, high-net-worth individuals have found another way to preserve their assets and cash for their heirs.
By forming irrevocable life insurance trusts, commonly known as ILITs, and gifting money — which they will never get back, hence the irrevocable part — to a trust to buy life insurance policies, wealthy people can avoid having their children or grandchildren pay estate taxes on the policy's proceeds that are paid to the trust as beneficiary, which then flows to the heirs tax free.
"They're never going to see the money again, so they need to be happy that this is just a way to increase the amount of money that goes to the children," said Tyler Vernon, CEO of Biltmore Capital Advisors, in Princeton. "For wealthy people, there are just huge benefits of having that pay to an entity outside of their estate where their heirs have no taxes, versus inside their estate, where they can be subject to 50 percent taxes on everything."
For the proceeds to be free of estate or death taxes, the ILIT must be structured properly, with the trust designated the beneficiary and following other intricacies of the law, Vernon said. The insured also can transfer an existing policy, with some restrictions, to an ILIT.
E-mail to: ktarbous@njbiz.com
On Twitter: @KenTarbous
By Ken Tarbous
February 10, 2012 04:03 PM
Working in one of the most heavily regulated industries in the nation, bankers extol the positive aspects of government efforts to closely monitor “too-big-to-fail” institutions, police less-than-honest actors and protect businesses and consumers — but they also say many rules and regulations bring higher costs and unintended consequences that could cause harm to institutions and their business lines.
Now, say the executive teams at banks, a sense of “regulatory fatigue” is setting in as they consider new rules and regulations from the Consumer Financial Protection Bureau and the Dodd-Frank Wall Street Reform and Consumer Protection Act. And the most damage seems to be felt at the smaller banks.
By Ken Tarbous
February 10, 2012 04:34 PM
Federal legislation enacted in the aftermath of the 2008 financial meltdown, joining sometimes decades-old laws, have placed new compliance and reporting requirements among other new rules and duties on banking institutions, giving bankers more to do beyond serving customers, industry professional say.
By Ken Tarbous
February 10, 2012 04:37 PM
For the past several years, the banking world has been abuzz with talk of a new round of consolidation through mergers and acquisitions, with din growing louder as small community banks face tough decisions about their futures because of the need to comply with the costs of new regulations.
