ILIT Questions

[eloxley]

What is the name of your state? Ohio

I posted this question under Insurance as well, but maybe someone here may be able to help me.

My father-in-law recently passed away, leaving a sizeable estate. Everyone is being rather hush-hush about the whole thing, and I'd like to have a couple of questions answered. I recall several years ago, receiving at least one notice in the mail from FIL's attornies about a trust payment being made in the amount of $10k in my husband's name. We were given a set length of time to claim the $$, and not knowing what it was at the time, never thought anything of it. Husband always said to leave it, so we did.

In looking back, doesn't that sound like a beneficiary notice for an life insurance trust? I know I heard something being said about him having three trusts - marital, family and life insurance. Wouldn't that make my husband a beneficiary for the ILIT? I know this sounds petty, and I don't like asking, but don't want to press the family for any more info. I'm deeply saddened at his loss, but I'd also like to be a little more clued in to the whole situation.

If this is actually the case, does anyone know when the proceeds would be distributed? I was told because of the way the estate was structured, there will be no estate tax.

Thank you in advance for any insights/advice.

 

[Dandy Don]

If your husband is a beneficiary of any of the trusts, the trustee will probably be notifying him about this within the next few months. So he can either sit back and wonder about what he will be getting, or he can take charge and ask the trustee now, by certified letter, for a copy of any trust that he is named beneficiary in. The trustee is most likely currently in the process of managing the trust assets and handling the necessary paperwork. Your husband should also be checking at the county courthouse probate court to see if perhaps there is a last will and testament, which there probably won't be, since it looks like his father was smart enough in financial planning to put all of his assets into trusts.

Sure wish I was well off enough financially to be able to walk away from a $10,000 payment that someone was going to give me! Your husband, not you (since you are not the beneficiary and, consequently, they have no obligation to tell you anything), needs to find out the details about that, as well, which he should have done when it was first offered.

DANDY DON IN OKLAHOMA ([email protected])

 

[eloxley]

Thank you for the response.

From what I understand of ILITs, they can be individual or "second-to-die" policies. The notices of $10k payments I saw would have been policy premiums paid (or actually, gifted) by the insured (my FIL), rather than having the premiums taken directly from the funds in trust. Or, they could have been additional investments into the trust. In any case, we're not talking about a $10k benefit, but rather what you could imagine a $10k annual life insurance premium would buy. This was a rather sizeable estate with a minimum of three different trusts set up, one of which could be this ILIT.

What I'm wondering is, if these notices were truly "Crummey" notices to a beneficiary, is it possible that it could still be a "second-to-die" policy and my husband is only the beneficiary if my MIL were to pass away as well?

My husband and MIL have already met with the attornies and accountants. I have no doubt he is aware of the outcome, but may possibly not be entirely forthcoming about it all. Which is why I'm inquiring on a forum, rather than asking him directly. He has already stated that his mother receives the entire estate, but has not mentioned anything about life insurance. I didn't think anything of it until I remembered those notices and did a little research.

Thanks again for any insight.