New Mexico Irrevocable Funded Life Insurance Trust where Beneficiaries Have Crummey Right of Withdrawal with First to Die Policy with Survivorship Rider

• Category: Trusts - Irrevocable
• State: Multi-State
• Control #: US-0675BG
• Format: Word; Rich Text

Description

An irrevocable trust is a trust that cannot be modified or terminated without the permission of the beneficiary. In most states, a trust will be deemed irrevocable unless the grantor specifies otherwise. Once the grantor has transferred assets into the tr New Mexico Irrevocable Funded Life Insurance Trust with Beneficiaries' Crummy Right of Withdrawal and First to Die Policy with Survivorship Rider New Mexico Irrevocable Funded Life Insurance Trust (NM-IFLIT) with Beneficiaries' Crummy Right of Withdrawal and First to Die Policy with Survivorship Rider is a specialized estate planning tool that allows individuals to protect their assets, minimize taxes, and provide financial security for their beneficiaries. This trust combines the benefits of an irrevocable trust, Crummy power, and a survivorship life insurance policy to create a comprehensive solution. In this type of trust, the granter transfers ownership of a life insurance policy to an irrevocable trust. The trust is funded with assets, typically cash or marketable securities, that will be used to pay the premiums on the policy. The trust acts as both the owner and beneficiary of the policy, ensuring that the proceeds are protected and distributed according to the granter's wishes. One distinguishing feature of this trust is the inclusion of the Crummy power. Beneficiaries are granted the right to withdraw a certain amount of money from the trust within a specific time frame, typically 30 days. This allows the trust to qualify for the annual gift tax exclusion, as the withdrawal right creates a present interest for the beneficiaries. By incorporating a first to die life insurance policy with a survivorship rider, the trust ensures that the surviving spouse or other designated beneficiary is financially protected upon the death of the first insured. The policy pays out the death benefit upon the first death, providing a lump sum of money that can be used to cover expenses, pay off debts, or to continue funding the trust. This mechanism offers peace of mind, especially for families with substantial assets or estate tax planning considerations. Types of NM-IFLIT with Beneficiaries' Crummy Right of Withdrawal and First to Die Policy with Survivorship Rider: 1. Standard NM-IFLIT: This is the basic version of the trust, where the granter sets up the trust, funds it, and designates the beneficiaries. It involves a single first to die life insurance policy with a survivorship rider. 2. Split-Dollar NM-IFLIT: In this variation, the granter and the trust enter into a split-dollar agreement, where both parties contribute to the payment of premiums and share in the death benefit. This arrangement allows for greater flexibility and customization. 3. Dynasty NM-IFLIT: A dynasty trust is designed to benefit multiple generations, allowing the granter to establish a lasting legacy. By incorporating the first to die policy with a survivorship rider, the trust can continue to provide financial security for successive generations. 4. Charitable NM-IFLIT: This version incorporates charitable giving into the trust design. The trust can be structured to donate a portion of the death benefit or use trust income for charitable purposes while preserving the financial security of the beneficiaries. In conclusion, the New Mexico Irrevocable Funded Life Insurance Trust with Beneficiaries' Crummy Right of Withdrawal and First to Die Policy with Survivorship Rider offers a comprehensive estate planning solution with various tailored options to suit different needs. It provides asset protection, tax advantages, and financial security for beneficiaries. Seeking professional advice from an estate planning attorney or financial advisor is highly recommended understanding the specific benefits and implications of this trust.

New Mexico Irrevocable Funded Life Insurance Trust with Beneficiaries' Crummy Right of Withdrawal and First to Die Policy with Survivorship Rider New Mexico Irrevocable Funded Life Insurance Trust (NM-IFLIT) with Beneficiaries' Crummy Right of Withdrawal and First to Die Policy with Survivorship Rider is a specialized estate planning tool that allows individuals to protect their assets, minimize taxes, and provide financial security for their beneficiaries. This trust combines the benefits of an irrevocable trust, Crummy power, and a survivorship life insurance policy to create a comprehensive solution. In this type of trust, the granter transfers ownership of a life insurance policy to an irrevocable trust. The trust is funded with assets, typically cash or marketable securities, that will be used to pay the premiums on the policy. The trust acts as both the owner and beneficiary of the policy, ensuring that the proceeds are protected and distributed according to the granter's wishes. One distinguishing feature of this trust is the inclusion of the Crummy power. Beneficiaries are granted the right to withdraw a certain amount of money from the trust within a specific time frame, typically 30 days. This allows the trust to qualify for the annual gift tax exclusion, as the withdrawal right creates a present interest for the beneficiaries. By incorporating a first to die life insurance policy with a survivorship rider, the trust ensures that the surviving spouse or other designated beneficiary is financially protected upon the death of the first insured. The policy pays out the death benefit upon the first death, providing a lump sum of money that can be used to cover expenses, pay off debts, or to continue funding the trust. This mechanism offers peace of mind, especially for families with substantial assets or estate tax planning considerations. Types of NM-IFLIT with Beneficiaries' Crummy Right of Withdrawal and First to Die Policy with Survivorship Rider: 1. Standard NM-IFLIT: This is the basic version of the trust, where the granter sets up the trust, funds it, and designates the beneficiaries. It involves a single first to die life insurance policy with a survivorship rider. 2. Split-Dollar NM-IFLIT: In this variation, the granter and the trust enter into a split-dollar agreement, where both parties contribute to the payment of premiums and share in the death benefit. This arrangement allows for greater flexibility and customization. 3. Dynasty NM-IFLIT: A dynasty trust is designed to benefit multiple generations, allowing the granter to establish a lasting legacy. By incorporating the first to die policy with a survivorship rider, the trust can continue to provide financial security for successive generations. 4. Charitable NM-IFLIT: This version incorporates charitable giving into the trust design. The trust can be structured to donate a portion of the death benefit or use trust income for charitable purposes while preserving the financial security of the beneficiaries. In conclusion, the New Mexico Irrevocable Funded Life Insurance Trust with Beneficiaries' Crummy Right of Withdrawal and First to Die Policy with Survivorship Rider offers a comprehensive estate planning solution with various tailored options to suit different needs. It provides asset protection, tax advantages, and financial security for beneficiaries. Seeking professional advice from an estate planning attorney or financial advisor is highly recommended understanding the specific benefits and implications of this trust.