Estate Planning Pitfall — You own a high-cash-value insurance policy on your own life

Description

Abstract: A person who owns a life insurance policy that has built up a sizable cash value should realize that the death benefit will be included in their taxable estate. Depending on the size of the policy and the applicable estate tax exemption when the owner dies, the tax bill could be substantial. One option to avoid this is to transfer the policy to an irrevocable life insurance trust (ILIT). This article discusses what’s involved.