· Family obligations
· Unpaid bills
· Minor children need to be provided for
· Replace the loss of income
· Retirement income

Life insurance is a product not owned by many Americans today. Many policies lapse, due to the struggle that some have with financial obligations.

If you are not a wealthy individual, life insurance is a must. Take another look at the points mentioned above. Think about them for a moment: If something to happen to you, who would take care of your family? Would your children go to college? Would your husband of wife have to re-marry in order to survive?

The answers for those questions have all been satisfied in the use of life products. As the head of your household, you owe it to your family to give them nothing less than the best.

· Churches
· Social Services
· Co- workers
· Other non-profit organizations

Have stepped in to help many families in the time of bereavement. Better known as pass the hat.

The Difference: The charity receives the income and your beneficiaries will eventually receive the principle.

· If you are single and your net estate (including your life insurance) is more that $600,000
· Or if you are married and your total net estate is over $1.2 million

If so, you can reduce your estate taxes with an Irrevocable Life Insurance Trust.

A life insurance trust owns you insurance policies for you. Since you do not own them, it will not be included in your taxable estate. You pay fewer taxes and more of your estate can go to your family.

Benefits

· More control over how the proceeds are used
· Funds can be used to pay estate taxes and other financial expenses
· The surviving spouse can receive a life-time income and keep the proceeds our of both of your estates
· Proceeds can be used to provide income to you children, not giving them the full amount

When a Personal Residence Trust is set up:

· The home is transferred to an irrevocable trust
· 10- 15you would retain the right to use and live in the home
· After a period is over, the residence transfers over to beneficiaries
· If you die, before the term is over, your home will just be included in your taxable estate
· Depending on the terms of the trust, you may have to pay rent because you out-lived the duration of the trust
· The house will not receive a stepped-up basis, when you die.
· NOTE: This trust is also known as a Grantor Retained Income Trust (GRIT)

The Difference:

· Lets you transfer any asset out of your taxable estate.
· You receive an income, instead of continuing to live in your home for a set number of years.

NOTE: If the income you receive is a set dollar amount that does not fluctuate each year… this is known to be a GRAT (Grantor Retained Annuity Trust).

The Difference:

· Lets you transfer any asset out of your transferable estate.
· You receive an income, instead of continuing to live in your home, for a set number of years.

NOTE: If the income percentage of the trusts assets and the amount of income you receive fluctuates each year, the trust if a GRUT.

A GRAT and a GRUT will let you transfer an income-producing asset (like a family business or real estate) into an irrevocable trust for a set number of years. During this time, the trust pays you an income.

When you do set up a Family Limited Partnership, here is what happens:

· You transfer assets into the partnership in exchange for partnership shares.
· You keep general partnership shares
· You gift limited partnership shares to your children
· You have full control
· You determine how the assets are managed
· When will the income be distributed
· How the partnership is run
· Limited partners (your children) are passive
· Losses and profits are allocated among the partners

· Shares cannot be sold or transferred without your approval

· A family limited partnership gives you more control that a corporation. Stockholders can have substantial voting rights and can force sales, distributions and liquidations.

They are highly recommended for:

· Lawyers
· Doctors
· Architects
· Entrepreneurs
· Contractors
· Property Developers
· Accountants

Asset Protection Trusts are well known as Offshore Trust because they are created under the laws of a foreign country.

The Asset Protection Trust is set up like this:

· Assets transferred to a limited partnership
· The general partner keeps 1% of the shares
· The general partner has full control
· 99% shares would be transferred to the foreign trust
· The assets do not leave the country

· You transfer title of the property to a corporate trustee or corporation
· You keep full control over how the property is managed
· In all financial dealings, your personal name never comes up
· Land trusts are valid are valid in most state
· Trustee fees are very low

· Your estate will be allowed to use the marital deduction if your spouse is not a U.S. citizen.
· Uncle Sam does not want non-citizen spouses to inherit estates and return to their homelands without paying estate taxes.

NOTE! In 1988, the Congress decided to eliminate the Unlimited marital deduction for non-citizen spouses.

Also, when you die, everything in your estate over $600,000 (your exemption) will be taxed – unless your living trust includes a Qualified Domestic Trust.