How does the SUPERTRUST overcome the problems of an Irrevocable Life Insurance Trust?
A. 1. A recommended way to overcome the problem of transferring already existing policies into the Trust is to consider the costs and advantages of simply replacing such policies. If this is not possible, the 3 year rule will apply, but betting that you will live for the 3 years is worth the estate tax saving gamble. With modern Life Insurance Company’s new amortization schedules and administration techniques, it is sometimes cost effective and simple to replace existing insurance with a new policy owned by the SuperTrust, assuming you are still insurable. This allows the SuperTrust to be the original owner of the insurance and so it will not be included in your estate for tax purposes. 2. The SUPERTRUST contains an escape hatch to avoid the problem of irrevocability. The Trust assets can be restored to the Grantor through the Special Power of Appointment Clause. This special power would permit the Grantor’s Spouse, (if any) to appoint the assets back to the Grantor without adverse tax
