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Did you know that your heirs may have to liquidate your home or rental properties immediately after your death, unless you create an Irrevocable Life Insurance Trust (ILIT)?

Most people are interested in passing their wealth to their heirs. With the demise of the baby-boomer generation, an enormous transfer of wealth will occur during the coming years. The government is poised to capture this wealth through the estate tax, which is imposed upon death.

Currently, the Federal estate tax exemption amount is $1.5 million for individuals and $3 million for married couples. Any amount over the exemption will be taxed (Federal estate taxes average around 45%). Furthermore, this tax must be paid within nine months after you die.

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Estate planning is a tricky concept, but one you have to tackle. The living trust is a key component of most estate planning efforts.

The idea of a Trust began back in the 16th century in England as a way to circumvent the control of the King over property after death. The King had the right to distribute a person’s property after his death and people worried that their estates would not be distributed to their heirs by the King. They would deed their property to another entity, usually the Church, in return for the promise that the Church would distribute it to their heirs according to their wishes. In other words, they were trusting the Church to look out after their interests after their death.

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