Introduction
Smith Strong, PLC proudly assists business owners with drafting buy-sell agreements that are typically funded by life insurance paid by the company/business. Following recent Supreme Court rulings, it is common to advise business owners to consider adding an Irrevocable Life Insurance Trust (ILIT) for the tax benefits that are afforded to the owner of the business and their estate.
Insurance Proceeds
While every situation is different, it is generally now recommended that in situations where life insurance proceeds are used to purchase a business pursuant to a buy/sell agreement, an Irrevocable Life Insurance Trust (also known as an ILIT) be utilized to avoid the insurance proceeds counting towards the federal estate tax obligation of your or your business partner’s estate. Along with your typical buy/sell agreement and succession planning documents, our attorneys at Smith Strong, PLC can assist you with creating an ILIT in Virginia to take advantage of its tax benefits.
We routinely work with highly experienced life insurance brokers that understand the tax forms that must be filed in the same year of issuance of a life insurance policy to further assist with lowering and/or eliminating tax obligations upon your passing. We not only want to provide you with the business and succession planning you need, but also to add value by knowing what lies ahead upon the passing of you or your business partner and reduce the accompanying tax liability that may occur at that time.
It is critically important for business owners to work with attorneys who are experienced in this area of Virginia business planning to ensure they are receiving the right legal solution with tax benefits you didn’t know existed. To get started, please call our office at (804) 325-1245 and request a 30-minute, exploratory call for your business planning needs.
Special thanks to Owen Togna for editorial assistance in drafting this article.
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