Life insurance is a key component of an estate plan. It is critically important that the attorney makes sure that the estate plan is regularly reviewed. In this context it is imperative that the client’s life insurance policies are reviewed periodically to make certain that they still achieve the client’s objectives. Further, to the extent that the policies are owned in life insurance trusts, the trustees have an obligation to make sure the policies are reviewed at regular intervals.
Life insurance is an amazing tool from an estate planning perspective. It can be owned by an irrevocable life insurance trust and payable to the trust and remain outside of the insured/grantor’s taxable estate. This is a very common tax planning technique. However, in meeting with clients year after year it has become clear that in most cases, trustees of these insurance trusts are not sensitive to their responsibilities in the operation of the trusts during the grantor’s life.
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