Acts of ownership in a life insurance policy allows the owner to make modifications, beneficiary changes, borrow from the policy and pay premiums. Ownership transfers within three years will still be included in the decedent's estate if they pass away.
If the decedent owns a life insurance policy (or transferred one out of their name within the last three years), then the proceeds are included in the gross estate of the decedent. Beneficiaries receive the proceeds federal income tax–free, and there is no gift tax triggered when ownership changes names unless cash values have accumulated in the policy.
An ILIT is an irrevocable trust, so after it is drafted changes cannot be made.
No tax deduction is given for premium payments on individual policies.
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