Broker Check

InnerBanks Wealth Management - Greenville, NC

Estate & Trust

InnerBanks Wealth Management collaborates with your tax and legal professionals to create sophisticated asset transfer strategies that aim to protect and preserve your wealth. Tactical forward planning seeks to minimize the impact of taxes on your estate and can also protect your assets from critical health, personal and business risks.

Effective estate planning allows you to preserve your lifestyle while efficiently transferring assets to the next generation or to your family’s selective charities.

We offer trust services through The Private Trust Company (PTC) an independent trust company dedicated to the administration of trusts and other family wealth arrangements such as family offices, businesses and foundations.  The Private Trust Company, an affiliate of LPL Financial, dedicates its attention to serving the clients of financial advisors, delivering trust services and applying their high quality service to every step of the trust administration process.  PTC specializes solely in providing administrative fiduciary services.

InnerBanks Wealth Management and LPL Financial do not provide tax or legal advice or services.

To learn more about our Advisor Directed Trust Services, click here.

Questions about our Estate Planning and Trust Services? Contact us.


Irrevocable Life Insurance Trust (ILIT) Reviews

Proper planning can help protect your family’s financial security. 

In most cases life insurance proceeds can pass to named beneficiaries of the policy free from personal income tax, but those proceeds are still subject to estate taxes. That’s right--the general rule is that life insurance proceeds are subject to federal estate tax (and, depending on your state’s laws, state estate tax as well). 

Ownership of the Insurance Policy is Key 

Generally, all the property you own at your death is subject to federal estate tax. However, each of us has a lifetime estate tax exemption ($5.43 million in 2015), so only individuals with estates that exceed this exemption amount need to be concerned about planning for estate tax. The important point here is that estate tax is imposed only on property in which you have an ownership interest; so if you don’t own your life insurance, the proceeds will generally avoid this tax. This begs the question: Who should own your life insurance instead? For many, the answer is an irrevocable life insurance trust, or ILIT (pronounced "eye-lit"). 

What is an ILIT? 

An ILIT is a trust primarily set up to hold one or more life insurance policies. The main purpose of an ILIT is to avoid federal estate tax. If the trust is drafted and funded properly, your loved ones should receive all of your life insurance proceeds, undiminished by estate tax. 

How does an ILIT work? 

Because an ILIT is an irrevocable trust, it is considered a separate entity. If your life insurance policy is held by the ILIT, you don’t own the policy--the trust does. 

You name the ILIT as the beneficiary of your life insurance policy. (Your family will ultimately receive the proceeds because they will be the named beneficiaries of the ILIT.) This way, there is no danger that the proceeds will end up in your estate. This could happen, for example, if the named beneficiary of your policy was an individual who dies, and then you die before you have a chance to name another beneficiary. Since you don’t own the policy and your estate will not be the beneficiary of the proceeds, your life insurance will escape estate taxation. Your first step is to draft and execute an ILIT agreement. 

Seek Qualified Legal Counsel  

Precise drafting of the ILIT agreement is essential and you should hire an experienced attorney. Although you’ll have to pay the attorney’s fee, the potential estate tax savings should more than outweigh this cost. Because an ILIT must be irrevocable, once you sign the trust agreement, you can’t change your mind; you can’t end the trust or change its terms. 

Questions about the proper role of life insurance in your estate planning? Contact us.

InnerBanks Wealth Management and LPL Financial do not provide legal advice. Forefield Inc. does not provide legal, tax, or investment advice. 

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