When it comes to estate planning, there are several basic documents all people should consider and some that may not make sense for every situation. Choosing between a will or trust, or opting for both, is a big part of the estate-planning process. While wills can be fairly straightforward, there are actually several different kinds of trusts that can offer residents of the District of Columbia more comprehensive coverage.
One type of trust many people may not be familiar with is an irrevocable life insurance trust. One tactic some individuals may use to help reduce the overall impact of estate taxes is to purchase a life insurance policy in an amount similar to the estimated estate taxes for which the estate will be responsible. In order for the value of this life insurance policy to avoid being lumped into the estate, a trust must first be created and a trustee allowed to purchase the policy. Individuals who already have a life insurance policy may be allowed to gift that policy to the trust.
Creating this type of trust may seem like a fairly simple process, but certain stipulations do apply. To learn more about irrevocable life insurance trusts and if it is a good fit for your situation, please visit our Irrevocable Life Insurance Trusts website. Here you will also find information about another life insurance policy that could benefit couples and help cover estate taxes.
Estate planning is more than just deciding who gets what in the event of one's death. Protecting an estate from unnecessary fines or outrageous taxes is an integral part. Taking the time now to plan for how estate taxes will be covered in the event of your death will allow beneficiaries the ability to actually enjoy the inheritance intended for them. An attorney in the District of Columbia who has experience in all aspects of estate planning can help you set up a comprehensive trust that ensures that all legal bases and financial concerns are covered.