Malleo Financial Services

Michael A. Malleo 

Phone: 201-321-7041


State of New Jersey Department of Banking and Insurance Licensed Producer: Title, Life, Health 


State of New Jersey

Notary Public Commission: 

Notary Public 


Title Insurance Terms:

Owner's Title Insurance Policy –  A policy which is purchased by the homebuyer. While it is the buyer's choice, purchasing an "owner's title insurance policy" is the best way to protect your property rights, as well as your trustees, inheritors, and beneficiaries.


Member of ALTA
Member of ALTA




















*The opinions expressed on this website are strictly those of Malleo Financial Services, LLC and not those of ASH Brokerage Corp.., or any of our affiliates.


*Malleo Financial Services LLC cannot and

will not give any tax or legal advice.


ILIT - Irrevocable Life Insurance Trust

Life insurance used for estate planning solves many estate issues by providing liquidity at death. However, the usefulness of life insurance is reduced when proceeds are taxable in a decedent’s estate.


Fred, a widower, has a $7,000,000 estate invested mostly in real estate. Fred wants to have money to pay estate taxes so the real estate does not need to be liquidated at his death. However, he currently has a loan of $2,000,000 on the real estate and does not want to leave the debt to his son Lamont upon his death. With various deductions, it appears Fred’s federal estate tax will require a policy of approximately $2,000,000.



Without ILIT

Estate: $7,000,000

- Real Estate Loan ($2,000,000)

+ Life Insurance Policy $2,000,000

= Taxable Estate: $7,000,000

- Federal Estate Tax ($620,000)

+ ILIT Policy ----------

= Net to Heirs $6,380,000


 Any estate in excess of $5,450,000 will incur a Federal tax of 40%. In this example, the

taxable excess is $1,550,000, and the life Insurance is included from the taxable estate.



An "Irrevocable Life Insurance Trust" (ILIT) is a type of trust that you keep a life insurance policy in. The trust shelters your policy from being part of your taxable estate, so the death benefit won’t be susceptible to estate taxes.



Advantages of an ILIT include:

+ Proceeds not included in insured’s estate

+ Provides estate liquidity without taxation of proceeds

+ Avoids both Federal and State death taxes

+ With use of Present Interest Gifts of $14,000 per beneficiary and Lifetime Gift Tax    Exemption of $5,450,000 as of 2016, avoids gift tax



Disadvantages of an ILIT include: 

- Client must give up direct control over policy and gifts of premium

- Transfer must be complete and permanent

- Cannot change beneficiary or ownership of policy and cannot have any incident of   ownership

- Events can later change with divorce, financial situation, stability of children etc.     yet policy cannot be changed since insured does not own policy




Estate: $7,000,000

- Real Estate Loan  ($2,000,000)

+ Life Insurance Policy $0

= Taxable Estate: $5,000,000

- Federal Estate Tax $0

+ ILIT Policy $2,000,000

= Net to Heirs $7,000,000



A "Guaranteed-No-Lapse" Universal Life (GUL) policy is a great match for an Irrevocable Life Insurance Trust (ILIT). It is a low-cost permanent life insurance policy that does not accumulate cash value, but provides a guaranteed death benefit as long as premiums are paid. That, in essence, is how an ILIT should work by minimizing cost and providing a permanent guaranteed benefit.




For a free consultation, please contact us for an appointment.



 *This blog is strictly the opinion of Michael A. Malleo and not those of

ASH Brokerage Corp., Quest Capital Strategies, Inc., nor any of our affiliates.


Malleo Financial Services LLC cannot and will not give any specific tax or legal advice.

Please consult your tax professional or legal professional for such advice.