Discussion:Loan from Life Insurance Trust
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Discussion Forum Index --> Tax Questions --> Loan from Life Insurance Trust
Msmith7305 (talk|edits) said: | 12 March 2007 |
| After years of nothing happening in a client's unfunded life insurance trust, this year is different.
Client took a $ 100,000 loan from trust. During year he paid back approx $ 14,000 principal and $ 2,000 interest. I can not find any information regarding the tax implication of these transactions, if any. Can anyone guide me to an answer? Thanks | |
| 12 March 2007 | |
| Generally an irrecovable life insurance trust falls under the grantor rules. | |
Msmith7305 (talk|edits) said: | 13 March 2007 |
| Dennis-
I think that is only true if grantor still retains some power over what is done with the trust. Anyone else care to jump in? | |
| 13 March 2007 | |
| Not true. Dennis is correct. A life insurance trust is a type of Sec. 677 grantor trust if the trust instrument allows the trust to apply its income to the payment of life insurance premiums on policies on the life of the grantor or his spouse. | |
Msmith7305 (talk|edits) said: | 13 March 2007 |
| OK. But, what if the trust instrument does not provide for the payment of premiums with income? | |
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