This is benefit No. 4. Let's do these steps again using real numbers and a hypothetical situation. For purposes of illustration, pretend that you and your husband are aged 62 and 65 respectively. You visit your lawyer and create the charitable remainder trust and the life insurance trust. The value of the remainder given to the charity can be calculated by your CPA, using your life expectancy and information contained in the tax code.
Lets continue with our hypothetical situation.
E. Every year, take part of your increased income and make a gift to the life insurance trust. The beneficiaries of the life insurance trust are your children. The life insurance policy will replace the value of the property you gave to the charitable remainder trust. And because the policy is owned by the life insurance trust, its value will not be included in your taxable estate. As a result, it will pass to your children without reduction for estate taxes.