How a life insurance trust could lower your estate taxes

Description

Abstract: In 2017, the Tax Cuts and Jobs Act significantly boosted the estate tax exemption, which is the amount of an estate that is exempt from taxation. This could change, however, if the estate tax exemption is cut in half in a few years as is currently scheduled. This article explains that it’s important for people to start thinking about how they can reduce or eliminate federal estate taxes if their estates will be larger than the new exemption amounts in 2026 and beyond. It suggests that one idea is to set up an irrevocable life insurance trust (ILIT), and discusses the ins and outs of that approach.