Last Tuesday I attended a networking group for women at Zin on the lake in Westlake Village. Since we have been having mild summer weather it was a wonderful choice of locations to have a drink and mingle with the other ladies who attended.

I was listening to a conversation between one of the ladies who announced to the Estate Planning Attorney that she had recently learned there is a death tax. I like to think of it as an Estate tax as it is usually paid by very large estates. She wanted to know if there was a way around it. The Attorney explained that this year (2010) the tax on estates is nil and until Congress does something it may be based on assets over $1 million in 2011. She could reduce her estate by gifting $13,000 to whomever she wanted to.

The conversation came to mind over the weekend.

The Attorney never mentioned that one of the options available to cover the tax is having an Irrevocable Life Insurance Trust that would purchase life insurance to cover the amount of estate tax that might be owed at her death. If the premiums are large she can set up the trust with gifts to her kids or grandkids that would go to pay the premium.

An attorney knowledgeable in Irrevocable Life Insurance Trusts would need to be consulted along with a CPA and a knowledgeable insurance agent.