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Article: Are you losing 30 percent of your insurance premiums?(Blackman On Taxes)
- Article from:
- Modern Machine Shop
- Article date:
- September 1, 2007
- Author:
CopyrightCOPYRIGHT 2007 Gardner Publications, Inc. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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Buying life insurance is the best method to legally beat estate tax laws. Here's a typical real-life example: Joe and Mary bought a $3 million second-to-die life insurance policy, which was owned by an irrevocable life insurance trust (ILIT). After paying $1,020,590 in premiums ($30,927 per year) for 33 years, Mary dies (Joe had died five years earlier). Because Mary is the second to die, the ILIT received the $3 million death benefit. The entire profit, almost $2 million, ($3 million less the $1,020,590 of premiums paid) was income tax-free. The ILIT protected every dollar of the $3 million from the estate tax.
Involving insurance in an estate plan can be a ...