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Grantor Trust
Posted by: SJenkins, April 8, 2015 11:53PM
I currently have a grantor trust I am the grantor and my children are the Trustees. This trust was executed in 1999 when the estate tax exemption was quite low. Life insurance policies fund the trust and the purpose of the trust was to use the insurance proceeds to pay estate taxes on my other assets. This is no longer necessary with the higher estate tax exemption. The insurance polices now show the trust as the owner. Could the children as trustees change the ownership of the policies and simply make themselves the owners of the insurance. This would remove those policies from funding the trust (there is nothing else funding the trust) Trusts are complicated and I would prefer to not pass the administration of the trust which is no longer needed on to my children to administer. Right now the premiums on the policies are paid ahead so I would prefer to keep the policies active.
Thank you so very much for any help you might offer

Re: Grantor Trust
Posted by: Drewremedy, April 9, 2015 01:14PM
Trust administration varies, and it can be pretty darn simple ....and even the tax returns can be pretty straight forward....

I don't trust government not to seek to tax anyone who has anything....Id maintain my flexibility.

Id get a real tax pro to comment on your plans ...not an insurance salesperson .

I sense you are confusing ownership with benificary designation...

Re: Grantor Trust
Posted by: jainen, April 9, 2015 02:29PM
SJenkins Wrote:
>>Could the children as trustees change the ownership of the policies and simply make themselves the owners of the insurance.<<

There are some general rules under state law about fiduciaries, but mostly the authority of trustees is spelled out in the terms of the trust document itself. It will say, for example, whether they all must agree or one can act independently. It will also say things about the grantor, such as what changes can still be made. Probably the best person to explain these terms is the lawyer who drafted the trust, but any attorney specializing in estate planning can help.

Re: Grantor Trust
Posted by: Sven, April 15, 2015 01:45AM
It sounds like this was done in 1999 as an irrevocable life insurance trust. Is that correct?

In the end what the trust says governs and if it was an ILIT, you have no control over anything and whatever powers were given to the trustees will control what happens to the policy.



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