Life insurance is a more effective estate planning tool than many people realize, but there are additional possibilities with this strategy that can make life insurance even more attractive for estate planners in New Jersey. One example is the possibility of moving the life insurance into a trust. When a trust owns a life insurance policy, the estate planner can experience a range of potential benefits. But does this strategy make sense for you?
Irrevocable Life Insurance Trusts in New Jersey: How They Work
One of the key benefits of having life insurance is that your beneficiaries receive money tax-free when you pass away. However, estate tax may still apply to these payouts in New Jersey, which somewhat lessens the advantages of life insurance as an estate planning strategy. One potential strategy to sidestep this estate tax is to move the life insurance policy into a trust. When you do this, you cease to own the life insurance policy. Instead, the trust owns the life insurance policy. The advantage is simple: When a trust owns a life insurance policy, estate tax may no longer be required.
One important requirement to consider is the three-year lookback period. The establishment of a life insurance trust cannot be a last-minute endeavor. If you pass away less than three years after establishing the life insurance trust, the courts will essentially ignore it and tax your life insurance payouts normally. This is yet another reason why it is a good idea to get started with your estate plan as soon as possible. Consider booking a consultation with an estate planning attorney in New Jersey to discuss your options.

Are Life Insurance Trusts Reserved Only for the Wealthy?
Life insurance trusts have proven quite popular among the wealthiest Americans. This is because the federal tax estate exemption is now almost $13 million. In other words, those with less than $13 million that they wish to pass on to their beneficiaries do not need to worry about federal estate tax.
But what about New Jersey’s inheritance tax? Normally, the exemption is very low. But in the case of life insurance payouts, beneficiaries never face inheritance tax in New Jersey. This means that for the most part, life insurance trusts may only be truly beneficial for those passing on fortunes greater than $13 million.
Where Can I Find a Qualified Estate Planning Attorney in New Jersey?
If you have been searching for an experienced estate planning attorney in New Jersey, look no further than Giro, LLP, Attorneys at Law. Over the years, we have helped numerous estate planners in the Garden State protect their wealth and take advantage of effective strategies. Moving a life insurance policy into a trust is just one potential strategy, and there are many others to discuss. Book your consultation today to explore the full range of estate planning strategies available to you.