Steelart99
Recycles dryer sheets
- Joined
- Apr 24, 2012
- Messages
- 184
This is exactly how my parents did it / are doing it. Bought a second-to-die policy, transferred ownership of it into an ILIT, and then make annual gifts to the ILIT equal to the insurance premium.
For a while my sister (trustee of the ILIT) was sending out Crummey letters. We finally decided we didn't need to bother as we are all on board with the program.
Ah, OK. Thanks for the explanation. Since your Mom isn't going to be investing the cash anyway, then lending it out could make sense. But this doesn't really *reduce* your Mom's estate any (unless the AFR is less than what she's getting on her cash now, which it could be).
Have you thought about what happens if one of your siblings borrows $1M from your Mom and invests in the next Enron?
Enron ... funny. I'm trying to determine is any "loan" can be simply renewed if the term is reached before the Estate Tax issue needs to be addressed. Further, I'm also finding out if the "loan" can simply be forgiven by the executor of the will upon mom's death without triggering a taxable event. Sigh ..
Another reason to hire an expert.