Our Services
Three Simple Steps
To Access Our Shop You Will First Be Asked To Submit Our Consent Form
1. Purchase Your TOLI
TOLI L.C. allows you to purchase everything you could need to create and manage your very own life insurance trust through our online store. The first step is to purchase your very own Life Insurance Trust.
2. Complete Intake
Upon purchase, TOLI L.C. will provide you with a copy of our attorney-client agreement, as well as an intake form (with an instruction sheet) for you to submit so we can streamline your trust document.
3. Receive Your TOLI
After we receive your intake form, our attorney will start drafting your trust document in accordance with your intake form and deliver it to you upon completion. Check out our articles for more information.
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Filing your Trust with the IRS
Once you receive and sign your trust document, you will want to file the trust information with the IRS. When doing so, you will receive a tax identification number which will allow you to report taxes and open up a trust bank account.
Keep in mind that the trustee you selected during the intake process should be the one in charge of everything that relates to the life insurance trust, which is very important. Make sure to check out our articles to determine who you should choose as your trustee.
Transmutation Agreements
A life insurance trust avoids estate tax inclusion because it is irrevocable, and thus no longer considered your property (as you are typically using annual gift tax exclusions to pay off insurance premiums). Simply stated, the IRS will not include the proceeds in your taxable estate because you are not receiving any benefits from the insurance policy.
This becomes a bit more complicated if you fund the trust with marital property and also name your spouse as a beneficiary. Transmutation agreements allow you to work around this issue by changing marital property to separate property so that you can use the separate property to fund the trust.
TOLI Trusts
Estate Planners and Insurance Agents often recommend that people create a separate trust to own their life insurance policies. Although beneficiaries will receive insurance proceeds income tax free without a trust, those proceeds may not be exempt from estate taxes. Thus, a TOLI can produce substantial transfer tax benefits.
Additionally, a trust can provide far greater flexibility with respect to asset management and eventual distribution. Moreover, the assets in the insured's spouse's and children's trust carry more protection from potential creditors.
If you are interested in learning more, check out our blog for more information!
It is a common misconception that life insurance proceeds are distributed completely tax free. Yes, it is true that life insurance proceeds are received income-tax free, but not estate-tax free (which can be taxed up to 40%). A great way to ensure that your life insurance proceeds are also distributed estate-tax free is to name your trust as the policy's beneficiary, and have your loved ones paid in accordance with the trust's terms. A life insurance trust also provides more control on how proceeds are disbursed, as well as protection from potential unforeseen creditors.