Life Insurance Trust

Life Insurance Trust

A number of opportunities are available for estate planning with life insurance. Many different types of life insurance products are on the market today, including "Term Insurance", "Universal Life Insurance", "Split Dollar Insurance" and "Whole Life Insurance". Depending upon the particular situation, one or more of these products may have a valuable place in your estate plan. "Split Dollar Insurance" provides that a portion of the cost is paid by a business entity, the other portion is paid by another person (e.g., the insured). Payment of a potion of the premiums by the business creates taxable income to the employee-insured. The beneficiary can be the insured, his estate, the business or family members. These policies are useful to provide cash on the death of the insured which can then be available to fund buy-sell agreement in which the employee pays for the term portion of a policy, while the corporation pays for the whole life or investment portion. With each of these products, it is possible to establish an irrevocable life insurance trust during your lifetime so that in the event you die more than three years after the creation of the trust, the insurance proceeds can be excluded from both your taxable estate and from the taxable estate of your surviving spouse. An insurance trust might provide that upon your death, the proceeds from your life insurance policies are to be collected by your Trustees (one of whom can be your spouse) and all of the income from the trust is to be paid to your spouse for life. The Trustees (other than your spouse) could have the right to invade the principal of the trust for your spouse's benefit. Upon the death of your spouse, the assets could pass to your successor beneficiaries, such as your children, either outright or in further trust. To the extent that the value of the trust increases during the term of the trust, all of the trust assets, including the appreciation, will pass to the ultimate beneficiaries. If you are presently discussing the possibility of purchasing life insurance, consideration should be given to whether the policy should be owned by an individual or by a trust, as well as the selection of the beneficiaries.
A number of advantages and disadvantages of insurance trusts should be considered.

Advantages

(a) If you die more than three years after the creation of the trust and its funding, the assets in the trust are excluded from your estate.

(b) The trust will provide liquidity to help pay the estate taxes and administration expenses that may be payable on your other assets.

Disadvantages

(a) The trust is irrevocable and the provisions of the trust (including ownership of the policy by the trust), cannot be changed even if circumstances change.

Grantor Retained Income Trust ("Grit")

This type of trust involves a current gift by you to a trust wherein the "Grantor" (you) retains an income interest for a specified number of years (the "Term") and at the expiration of the term, one or more named beneficiaries receive the assets in the trust, either outright or in further trust. The IRS actuarial tables, which presently assume a 10% return on trust investments, are used to value the remainder interests for gift tax purposes.






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Kenneth Vercammen is the Managing Attorney at Kenneth Vercammen & Associates in Edison, NJ. He is a New Jersey trial attorney has devoted a substantial portion of his professional time to the preparation and trial of litigated matters. He has appears in Courts throughout New Jersey each week for litigation and contested Probate hearings.

Mr. Vercammen has published over 125 legal articles in national and New Jersey publications on elder law, probate and litigation topics. He is a highly regarded lecturer on litigation issues for the American Bar Association, NJ ICLE, New Jersey State Bar Association and Middlesex County Bar Association. His articles have been published in noted publications included New Jersey Law Journal, ABA Law Practice Management Magazine, and New Jersey Lawyer.

He is chair of the Elder Law Committee of the American Bar Association General Practice Division. He is also Editor of the ABA Estate Planning Probate Committee Newsletter and also the Criminal Law Committee newsletter. Mr. Vercammen is a recipient of the NJSBA- YLD Service to the Bar Award. And past Winner "General Practice Attorney of the Year" from the NJ State Bar Association. He is a 22 year active member of the American Bar Association. He is also a member of the ABA Real Property, Probate & Trust Section.

He established the NJlaws website www.njlaws.com which includes many articles on Elder Law. Mr. Vercammen received his B.S., cum laude, from the University of Scranton and his J.D. from Widener/Delaware Law School, where he was the Case Note Editor of the Delaware Law Forum, a member of the Law Review and the winner of the Delaware Trial Competition.

RECENT SPEAKING ENGAGEMENTS ON WILLS, ELDER LAW, AND PROBATE

Edison Adult School -Wills, Elder Law & Probate- 2007, 2006, 2005, 2004, 2003, 2002 [inc Edison TV], 2001, 2000,1999,1998,1997
Nuts & Bolts of Elder Law - NJ Institute for Continuing Legal Education/ NJ State Bar ICLE/NJSBA 2007, 2006, 2005, 2004, 2003, 2002, 2000, 1999, 1996
Elder Law and Estate Planning- American Bar Association Miami 2007
Elder Law Practice, New Ethical Ideas to Improve Your Practice by Giving Clients What They Want and Need American Bar Association Hawaii 2006
South Plainfield Seniors- New Probate Law 2005, East Brunswick Seniors- New Probate Law 2005
Old Bridge AARP 2002; Guardian Angeles/ Edison 2002; St. Cecilia/ Woodbridge Seniors 2002;
East Brunswick/ Hall's Corner 2002;
Linden AARP 2002
Woodbridge Adult School -Wills and Estate Administration -2001, 2000, 1999, 1998, 1997, 1996
Woodbridge Housing 2001; Metuchen Seniors & Metuchen TV 2001; Frigidare/ Local 401 Edison 2001; Chelsea/ East Brunswick 2001, Village Court/ Edison 2001; Old Bridge Rotary 2001; Sacred Heart/ South Amboy 2001; Livingston Manor/ New Brunswick 2001; Sunrise East Brunswick 2001; Strawberry Hill/ Woodbridge 2001;
Wills and Elder Law - Metuchen Adult School 1999,1997,1996,1995,1994,1993
Clara Barton Senior Citizens- Wills & Elder Law-Edison 2002, 1995
AARP Participating Attorney in Legal Plan for NJ AARP members 1999-2005
Senior Legal Points University of Medicine & Dentistry UMDNJ & St. Peter's-2000, 1999,1998
East Brunswick AARP Wills 2001; -Iselin/ Woodbridge AARP Wills 2000
Metuchen Reformed Church; Franklin/ Somerset/ Quailbrook Seniors 2001
North Brunswick Senior Day 2001
Wills, Elder Law and Probate-South Brunswick Adult School & Channel 28 TV 1999, 1997,1993
Wills and Estate Planning-Old Bridge Adult School 1998,1997,1995
Senior Citizen Law-Perth Amboy YMHA 1995; Temple Beth Or 2002;
Wills, Living Wills and Probate-Spotswood Community School 1995,1994,1993
Wills and Probate-Sayreville Adult School 1997, 1996,1995,1994
Living Wills-New Jersey State Bar Foundation and St. Demetrius, Carteret 1994
Wills and Estate Planning-Edison Elks and Senior Citizens January 1994
"Legal Questions Clinic" Metuchen Adult School March 1995,1994,1993
Estate Planning to Protect Families-Metuchen Chamber of Commerce April 1993
BUSINESS AND AMERICAN BAR ASSOCIATION SPEAKING ENGAGEMENTS:
Improving Your Elder Law & Estate Practice San Francisco, CA 2007
Elder Law and Estate Planning- ABA Miami 2007
Elder Law Practice, New Ethical Ideas to Improve Your Practice by Giving Clients What They Want and Need ABA Hawaii 2006
Marketing Success Stories ABA Toronto 1998
Opening a Business-Sayreville Adult School 1997,1996,1995
Olympians of Marketing- ABA Annual Meeting-Orlando, Florida 1996

Contact the Law Office of
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The Law Office cannot provide legal advice or answer legal questions over the phone or by email. Please call the Law office and schedule a confidential "in office" consultation.