DB Plan Sub-Trust owning Life Insurance

[RayJJohnsonJr 2]

Does anyone have any recent information on the use of a DB Plan Sub-Trust owning Life Insurance to keep it out of the taxable state. I cannot seem to find any recent articles on the subject.

I would appreciate any info you have.

[Guest Weslie]

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[Belgarath 444]

No, I haven't seen anything new on this. Other than Andy Fair, I've never seen anyone who thinks it is a good idea, and that includes me. Any client who thinks about messing this should have a top ERISA attorney and a very high risk tolerance.

[mbozek 27]

Does anyone have any recent information on the use of a DB Plan Sub-Trust owning Life Insurance to keep it out of the taxable state. I cannot seem to find any recent articles on the subject.

I would appreciate any info you have.

The reason that there are no articles on this topic is because any reputable tax publication would not accept an article advocating using a sub trust to exclude LI from the decedent's estate without including citations of substantial authority under the IRC as to why use of the sub trust does not violate the exclusive benefit rule, the non alienation rule and the spousal benefit provisions applicable to qualified plans. I dont think any counsel could write an opinion complying with IRS circular 230 that the LI in a sub trust could be excluded from the decedent's estate without violating all three provisions of the IRC.

Also you need to check on whether this use of LI to avoid estate tax is a listed transaction subject to monetary penalities if it is not reported to the IRS.

[Guest Weslie]

There's a website where you can answer a few basic questions and get a rate quote comparison among major life insurance companies. I work for this company and we help a lot of people: http://bit.ly/vD1iLg