I have previously written about the $15,000 annual exclusion, and Irrevocable Life Insurance Trusts (“ILIT’S”). ILIT’S are created primarily to own life insurance and remove the death benefit from the insured’s taxable estate. To achieve the desired estate tax benefit, premiums must be paid by the Trustee on behalf of the ILIT as the policy owner. For example, assuming Dad is the owner, when Dad writes a check for the premium, the check is written to the Trustee, not directly to the insurance carrier. When Dad pays the premium to the Trustee, this premium payment constitutes a gift to the ILIT beneficiaries, typically the surviving spouse and children. Now it gets complicated: In order to use Dad’s annual exclusion ($15,000 each per Trust beneficiary), the gift must be a “present interest.” If the payments are made to the ILIT, however, in which the beneficiaries do not receive benefits until Dad dies, the transfer is not a present interest. Thanks to Mr. Crummey (yes, that is his name), the taxpayer who came up with this plan, Dad can send out a “Crummey” letter converting the premium payment into a present interest by giving the beneficiaries (or guardians if minor children) the right to withdraw the premium payments. Consider this example: Dad’s premium is $30,000. He sends a check to his brother Bill, who serves as the Trustee. Bill deposits the $30,000 in Dad’s Irrevocable Life Insurance Trust Account. Upon receipt of the funds, Bill sends a letter to Dad’s two adult children, telling them “as beneficiaries you have 30 days to withdraw your share of the funds deposited in Trust, which equals $15,000.” After 30 days passes and the children have not withdrawn the premium payment, Bill sends an ILIT check for the premium payment to Large Insurance Company. The end result is Dad uses his $15,000 annual exclusion for the premium payment, without any gift tax consequence, and the ILIT protects the death benefit for Mom if she survives Dad, and ultimately the children estate and gift tax free.
Cameron/McEvoy is pleased to announce that John Dedon has been selected by The Medical Society of Northern Virginia as the recommended Estate Planning Lawyer for its Members. MSNVA is a non-profit association of Northern Virginia physicians, founded in 1984.
Cameron/McEvoy congratulates John Dedon for selection in Washingtonian’s “Top Financial Advisors Hall of Fame.” (February 2023.) John joins a few area lawyers who, for over a decade and year after year, have been named by Washingtonian as one of the top estate lawyers in the region. Since its inception in 2009, Washingtonian has asked hundreds… Read »
Coming up in December, John Dedon will be recognized in two prominent local publications. Washingtonian Magazine again names John as a 2023 Top Lawyer in the Trust and Estates category. Washingtonian Magazine chooses Top Lawyers by surveying local lawyers asking them whom they would trust if they needed legal counsel themselves. Northern Virginia Magazine also… Read »
In the March 2022 publication, John Dedon was again chosen by his peers and Washingtonian Magazine as one of the “Top Financial Advisors,” in the Estate Attorney section, for Virginia, Maryland and the District. John has been selected consistently for over a decade, and is routinely named as well for Washingtonian’s “Top Lawyers.”
In the December 2020 issue, John Dedon is again recognized by Washingtonian Magazine as a Top Trusts and Estates Attorney. Washingtonian Magazine chooses Best Lawyers by surveying nearly 1,000 attorneys recognized on a prior year’s list, asking whom they consider best among their peers. Coming up in the January 2021 issue, John will also again… Read »
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About Revocable Trusts
John P. Dedon
John P. Dedon is a tax lawyer with a talent for explaining the complexities of tax law in lay terms. Working in the estate planning, asset protection and business areas for more than 35 years, John helps clients preserve assets and plan for the future with traditional planning tools, including Trusts (dynasty trusts, intentionally defective trusts, grantor retained annuity trusts), LLC and partnership entities, and cutting-edge concepts such as cryonic preservation trusts.
Fellow of the American College of Trust and Estate Counsel (ACTEC)
“Hall of Fame” Washingtonian magazine Top Wealth/Financial Advisor
Martindale-Hubbell AV Rating/Top Rated Estate and Taxation Lawyer
Consecutive years named Washingtonian Best Lawyers; Best Lawyers in America® for Trusts and Estates; Top Lawyer and Top Financial Professional by Northern Virginia Magazine; Legal Elite by Virginia Business magazine