SUNWEST TRUST ILIT SERVICES, LLC

What is an Irrevocable Life Insurance Trust, or ILIT?

An Irrevocable Life Insurance Trust or ILIT is one of the last remaining and best tax planning tools still available under the Internal Revenue Code. Have you ever considered how your family would pay the estate taxes on non-liquid assets, such as real estate or a family business? Many have the mistaken opinion that life insurance proceeds are exempt from taxation, which is only partially true. Life insurance proceeds are generally exempt from income tax, but not estate tax. This could mean a large tax burden, not only from your estate, but also the insurance proceeds. Keep in mind that estate taxes can be as high as 55% depending upon the year of death and the size of the estate.

By having a properly formed and funded ILIT, an individual can potentially avoid both income and estate tax on the death benefit of the insurance policy. A good estate attorney can assist you in creating an Irrevocable Life Insurance Trust that can provide the following advantages:

• Money used to pay the life insurance premiums is generally transferred out the grantors estate gift tax free, thereby saving the estate tax on every dollar transferred in to the ILIT.

• The “leveraged” return from life insurance can be tremendous. Your life insurance agent can explain the potential value of this aspect of life insurance.

• Remember the death benefit of the life insurance policy is completely exempt from income and estate tax in a properly drafted trust.

• The proceeds from the life insurance would be available to the estate to provide for the payment of estate and other taxes and to provide support, maintenance, education, health and other important needs of family members.

• The money provided by the insurance in the trust could be very usefully if the estate has a large retirement account because it could be used to pay taxes in the value of the retirement account and the money in the account could remain in the retirement longer and continue the grow tax free or tax deferred.

• The trust can provide leverage with the Generation Skipping Tax exemption for the benefit of grandchildren. Your tax professional, attorney of insurance agent can explain this more thoroughly.

What does Sunwest Trust ILIT Services provide as the ILIT Trustee?

Sunwest Trust ILIT Services, LLC will work closely with your estate attorney to insure that your trust is set up property and that it provides the protection that was intended. The ongoing activities Sunwest will provide include:

• Comprehensive review of the ILIT vehicle with your attorney and/or insurance agent

• Initial and annual review with your attorney and insurance agent

• Accept and manage annual contributions

• Maintain trust account

• Prepare and send all Crummey letters

• Pay annual premiums

• Work with you, your beneficiaries and consultants to provide the best possible estate planning tools.

Irrevocable Life Insurance Trusts Policy and Fee Shedule

If you have questions, or would like to set up an Irrevocable Life Insurance Trust, call 1-800-642-7167, ext. 3809 or email us at ilit@sunwesttrust.com.