Anthony Vitiello, chair of Connell Foley’s Taxation and Estate Planning Group, authored the article “Self?Settled Life Insurance Trusts: A Viable Alternative?” for the December 22, 2014 Wealth Management special supplement to the New Jersey Law Journal. With today’s higher estate tax exemptions and more people feeling less secure about their finances, insurance advisors are recommending that clients keep their cash value life insurance policies in their own names if they are uncomfortable using a trust (and thus losing access to the cash value in case of need later in life). This article explores an alternative to this approach and discusses the viability of using a self-settled life insurance trust, a structure that allows a client to be a beneficiary of a trust that holds life insurance insuring the client’s life (thus providing access to cash value), as a means of having life insurance proceeds excluded from a client’s taxable estate.
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