The new federal estate tax under the recently signed fiscal cliff deal effectively raised exemption for couples to $10.5 million. It also made these exemptions portable between spouses. With that in mind, many are looking for plans that are least complicated with a much lower cost of preparing and administering.

One such estate planning tool recommended by many planners is the multipurpose irrevocable life insurance trust, otherwise known as MILIT. This star of olden times is a mainstay in earlier era estate planning, though needs somewhat of a re-make for the modern age. It offers clients a multipurpose trust that handles multiple planning goals packed in a single, streamlined combo.

Another advantage many applicants discovered is that a MILIT can be put in effect right away which gives applicants the opportunity to address problems with it even before death. This is especially important as it can avoid problems for the person’s heirs and beneficiaries.

Part bypass trust, irrevocable life insurance trust, and spousal lifetime access trust, the MILIT does not have to abide by the state's estate tax exemptions, instead, it provides protection for up to $5.25 million in assets. What’s really good about a MILIT is that it combines three trusts into one package that could save applicants hundreds if not thousands of dollars in legal costs and estate administration fees.

A MILIT also provides living applicants with the income tax shelter of a permanent life insurance policy. Once the person dies, it provides money to family members with the lowest incomes.

Another advantage many applicants discovered is that a MILIT can be put in effect right away which gives applicants the opportunity to address problems with it even before death. This is especially important as it can avoid problems for the person’s heirs and beneficiaries.

While a MILIT may be less complicated than other forms of trusts, it will require a massive overhaul of existing estate plans in order to transform it into a streamlined MILIT. Those that are just starting an estate plan will appreciate the uncomplicated process of starting one.

Keywords: multipurpose irrevocable life insurance trust, heirs and beneficiaries, bypass trust, irrevocable life insurance trust, spousal lifetime access trust