Woburn ILIT & Estate Tax Planning | Simmons & Schiavo, LLP

For families who have built significant wealth, estate planning is about more than just numbers on a ledger; it is about ensuring the people you love are cared for the moment you are no longer there to do it yourself.

As a primary provider, one of the most pressing concerns is liquidity. While your estate may be robust, much of that value might be tied up in a family business, Woburn real estate, or other illiquid assets. Your family needs immediate cash to maintain their lifestyle and cover estate expenses while your affairs are being settled.

The Massachusetts Estate Tax Paradox

Life insurance is designed to provide that immediate cash. However, there is a common misconception that life insurance is always tax-free. While the income is generally tax-free, the value of the policy is often included in your taxable estate calculations.

In 2026, the Massachusetts estate tax exemption remains at $2 million. Because the Commonwealth does not offer “portability” between spouses like the federal government does, a life insurance payout can easily push a Woburn estate over this threshold. Without proper planning, a significant portion of the safety net you intended for your children could be claimed by taxes.

The ILIT: A Shield for Your Legacy

To solve this, we often recommend an Irrevocable Life Insurance Trust (ILIT). By having a trust own your policy, you effectively:

Remove the death benefit from your taxable estate: This maximizes the inheritance left to your heirs.
Provide immediate liquidity: Use the funds to pay estate taxes or debts without being forced to sell a family business.
Protect assets from creditors: Ensuring the funds stay within the family and are protected from outside claims.

Understanding the “Three-Year Rule”

Timing is everything in estate planning. If you transfer an existing policy into an ILIT, the IRS requires you to live for at least three years after the transfer for those assets to be excluded from your estate. This is why we prioritize continuous, annual reviews with our clients. We don’t just draft a document and disappear; we stay by your side to ensure your strategy evolves as your life and the law change.

A Relationship That Lasts Generations

At Simmons & Schiavo, LLP, we believe that true estate planning isn’t a one-time transaction—it’s a lifelong partnership. Our commitment to you doesn’t end when the ink dries. We check in with our clients annually because we know that “peace of mind” is something that must be nurtured.

“When you are gone, we will be sitting at this table with your children, working through your trust. We are here for you, and we are here for them.”

Our goal is to provide the same compassion, clarity, and professionalism to your heirs that we provide to you today. We take pride in saving money for our clients while securing their family’s future.