Passing the Buck: Private Split-Dollar for Every Vocabulary: Split-Dollar Agreements Allow Wealthy Clients to Use Life-Insurance Trusts to Avoid Gift Taxes and Maximize Estate Value. Here's How They Work

Estate planners have designed several methods to help clients avoid or minimize gift tax. The irrevocable life insurance trust is one way to accomplish both goals. When properly implemented, contributions to the insurance trust have minimum gift tax implications and the death benefit passes free of estate tax and generation-skipping tax. For larger policies that require larger premiums, planners have advised families on the use of private split-dollar arrangements.