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California Estate Planning & Irrevocable Trusts

California Estate Planning & Irrevocable Trusts

Irrevocable Trusts

Irrevocable Trusts play a significant role in long-term care estate planning. In California we use Irrevocable Trusts to protect countable or non-exempt assets from being spent down on nursing home care.

We also use Irrevocable Trusts in conjunction with a Family Limited Liability Company or together with a Family Limited Partnership in order to protect assets and save death taxes.

An Irrevocable Life Insurance Trust (ILIT) is oftentimes used in conjunction with a Family Trust. In a properly structured ILIT, the insurance proceeds are received tax free on the surviving spouse's death. Individuals with the majority of their net worth invested in real estate, closely-held business interests or other illiquid assets will find the ILIT to be an effective estate planning tool for addressing their exposure to the death tax. The insurance proceeds will provide the cash to pay death taxes and expenses of administration, and thereby, avoid a forced sale of the assets in the estate.

The purchase of a Single Premium Immediate Annuity (SPIA) to fund an ILIT is a simple and effective technique for addressing the exposure to the death tax. A lump sum of money which would otherwise be subject to the death tax is used to purchase a SPIA. The SPIA pays a fixed dollar amount each year for your lifetime. The annual payments from the SPIA are then used to fund the ILIT. At the time of your death, the SPIA is not subject to death tax because it has no value at that time. The ILIT, on the other hand, will provide tax-free insurance proceeds to your family. 

Contact us for a Free Consultation  to learn more about the use of Irrevocable Trusts in Estate Planning.

THE LAW PRACTICE OF ZARCARO & ASSOCIATES IS LIMITED TO THE STATE OF CALIFORNIA. THE INFORMATION, IDEAS AND SUGGESTIONS CONTAINED HEREIN HAVE BEEN DEVELOPED FROM SOURCES THAT ARE CONSIDERED AND BELIEVED TO BE RELIABLE BUT CANNOT BE GUARANTEED INSOFAR AS THEY APPLY TO ANY PARTICULAR PERSON. NOTHING IN THESE PAGES IS TO BE CONSTRUED AS LEGAL OR FINANCIAL ADVISE. MOREOVER, BECAUSE OF THE TECHNICAL NATURE OF THE MATERIAL AND THE FACT THAT LAWS ARE NEVER STATIC, BUT EVER CHANGING, AT THE VERY LEAST THE ASSISTANCE OF A QUALIFIED LAWYER IS RECOMMENDED WHEN IMPLEMENTING ANY PLANS OR IDEAS DISCUSSED IN THESE PAGES. THE AUTHOR SPECIFICALLY DISCLAIMS ANY LIABILITY, LOSS, OR RISK, PERSONAL OR OTHERWISE, INCURRED AS A CONSEQUENCE DIRECTLY OR INDIRECTLY OF THE USE AND APPLICATION OF ANY OF THE TECHNIQUES OR CONTENTS OF THESE PAGES. ZARCARO & ASSOCIATES, A.P.C.

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