assics article100

[hogani1drue]

Avoiding the Three Year Life Insurance Transfer Rule by Julius Giarmarco, Esq.
Under Internal Revenue Code Section 2035, if the insured gifts a life insurance policy to a third party (such as an irrevocable life insurance trust, or ��ILIT��) within three years of his or her death, then the policy proceeds will be included in the insured��s estate for estate tax purposes. The only safe way to avoid this result is to have the ILIT apply for and own the policy from the outset (even if done with the insured��s gifted funds). Even momentary ownership of the policy by the insured within three years of his or her death will require inclusion of the full policy proceeds in the insured��s estate.
New Policies
What options are available for a new policy where the ILIT has not yet been created? Some states recognize oral trusts, which would later be memorialized. Thus, in those states if might be possible to have the oral trust as the initial owner and beneficiary of the policy. But, the risk with this approach is that the trust is not truly irrevocable so long as it is merely oral.
Another possibility is for a child or spouse of the insured to purchase the policy and then gift it to the ILIT once created. This approach has several potential problems. First, the donor (child or spouse) is making a gift to the ILIT with the attendant gift tax consequences. Second, if the child or spouse is a beneficiary of the ILIT, at least some portion of the ILIT will be included in his/her estate for estate tax purposes under IRC Section 2036 (transfers with a retained interest). Finally, the transaction might be ignored by the IRS under the step transaction doctrine. In other words, if the purchase of the policy by the child or spouse and the subsequent transfer of the policy to the ILIT are determined to be integrated,mbt walking shoe, interdependent and focused toward a particular result, then under the step transaction doctrine, the two steps would be collapsed together. As such, the insured would be treated as having made the gift to the ILIT. This might be the case if the insured provided the funds for the child or spouse to purchase the policy or if the two transactions were close in time.
Another often-used technique is to apply for the insurance in the insured��s name and then withdraw the first application and replace it with an application showing the ILIT as the initial owner. So long as the first application was not accompanied by any consideration, it would not be a binding contract and the insured would not be treated as having any incidents of ownership over the policy. Without any incidents of ownership vesting in the insured, the three-year rule would not apply.
Existing Policies
How can the three-year rule be avoided for an existing life insurance policy? The three-year rule of IRC Section 2035 only applies to gratuitous transfers. It does not apply to a bona fide sale of a life insurance policy for full and adequate consideration. IRC Section 2035(b). Thus,timberland sale uk, the insured could sell the policy to his/her ILIT.
But, under IRC Section 101(a)(2), the sale of a policy triggers the transfer-for-value rule. Under that rule,assics, a ��non-exempt�� transferee will have to report a portion of the death proceeds as taxable income when the insured dies. The portion includible as taxable income is the face amount of the policy less any consideration paid (purchase price and subsequent premiums).
However, in Rev. Rul. 2007-13, the IRS ruled that a sale of a life insurance policy to a ��grantor�� trust, of which the insured is treated as the owner for federal income tax purposes, will either not be treated as a ��transfer for valuable consideration�� or, if so treated, will be deemed to be a transfer of the policy to the insured �C one of the exempt transferees under the transfer-for-value rule. Thus, if the ILIT is designed as a grantor trust (as most are), the insured��s sale of the policy to the ILIT (for full value) avoids both the three-year rule and the transfer-for-value rule.
The sale of the policy is not as likely to be respected as a bona fide sale if the insured makes a gift to the ILIT shortly before the sale in order to fund the purchase. Therefore, it may be preferable to have the ILIT purchase the policy for a promissory note. The ILIT will most likely need annual gifts from the insured with which to make the interest payments. Since the ILIT will be a grantor trust, no income tax consequences should result from the interest payments to the insured.
In using this technique, care must be taken in valuing the policy. The ILIT must pay full and adequate consideration to avoid the transfer-for-value rule. Otherwise, a part gift �C part sale occurs, thereby triggering the three-year rule. For an insured in good health, the value of the policy is its interpolated terminal reserve value plus any unearned premiums. But for an insured in poor health, you may need to look at the life settlement market to determine the policy��s full value.
THIS ARTICLE MAY NOT BE USED FOR PENALTY PROTECTION.

[g4qyu6yf]

,Illustrated by side - ginger Card - Qzone log

| Back to logs list

Reprinted from 353542958 at 22:21 on November 2, 2010 Reading (loading. ..) Comments (0) Category: Health must know



ginger, is a familiar and popular junior food condiment. In addition to food, the medication can also be used. In recent years, pharmacological studies have shown that cooked with ginger

cold headache:
your feet immersed in hot ginger water can be dipped in water to ankle appropriate. Immersion in hot ginger water add some salt, vinegar, and continue to add hot water, soak the foot to the red so far. This method is cold cold, headache, cough, a significant treatment effect.

oral ulcers:
of tea with hot ginger water rinse,Genes determine who the couple in the child's IQ a, 2 to 3 times a day, usually 6 to 9 times ulcers Face to convergence.

periodontitis:
first washing with hot water, ginger tartar, and then use hot water on behalf of tea with ginger, 1 to 2 times per day, usually about 6 to eliminate inflammation.

sore throat:
of tea with hot ginger water gargle, daily morning and evening 1. If the throat itching, hot ginger water can be used on behalf of tea with a little salt added, 2 to 3 times daily,Strongest in the history of Xiamen Tourism Strateg, usually 9 or so to resolve inflammation and elimination of their primary concern.

tooth decay:
daily morning and evening adhere to gargle with hot water, 1 ginger, and used several times daily on behalf of the tea . This method of protecting teeth, dental caries prevention and treatment of migraine is quite effective

:
when the migraine attack, the available hot ginger Water soaked hands, soak about 15 minutes, the pain will be reduced, or even disappear.

neurasthenia:
morning and evening on an empty stomach the drink hot ginger water 1 to 2 cups, to receive qi, refreshing effect. Persisted for neurasthenia, dizziness, irritability embolism has a good effect.

drunken:
behalf of the tea in hot water with ginger, can accelerate the blood circulation, digestion and alcohol. Ginger in hot water can also add appropriate amount of honey, direct absorption of the body to alleviate or eliminate drunk.

facial acne:
wash face with hot ginger water a day, morning and evening, the 1st, which lasted about 60 days, will reduce acne or disappear. This method of dry skin such as freckles and some degree of therapeutic effect.

waist pain:

ginger first in hot water with a pinch of salt and vinegar, then wring dry with a towel soaked, spreads in the affected area, repeated several times. This method can change the muscle relaxation by Zhang, medicinal properties, can greatly ease the pain.

esophageal cancer:
peace, adhere to the ginger with hot water twice a day on behalf of tea, can play a relieve pain, prolong life or palliative effect.

hypertension:
blood pressure, the hot ginger water can soak your feet for about 15 minutes. Hot ginger water soaking feet, can cause reflex vasodilation, blood pressure drop.

atherosclerosis:
daily morning and evening insisted gargle with hot ginger water and drink before going to sleep in the day ginger 1 cup hot water, can promote blood circulation, prevent atherosclerosis.