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Why Dow Incorporated Workers Should Value Life Insurance and Trusts

Dow Incorporated employees should consider estate planning with Irrevocable Life Insurance Trusts (ILITs) to protect their assets and provide liquidity for their heirs to help preserve their financial legacy, says (Advisor Name) of The Retirement Group, a division of Wealth Enhancement Group.

With changing tax laws and rising estate tax concerns, Dow Incorporated employees can use an ILIT to shield their wealth from unnecessary taxes so their heirs get the full benefit of their life insurance benefits, advises (Advisor Name) of The Retirement Group, a division of Wealth Enhancement Group.

In this article, we will discuss:

1. Irrevocable Life Insurance Trusts - Their role in estate planning and tax management.

2. Key Benefits and Strategic Advantages - Understanding how ILITs provide liquidity, protect assets, and provide financial security for heirs.

3. Implementation and Tax Considerations - establishing an ILIT, tax implications, choosing the right trustee and insurance policy.

The only certainties in financial matters are death and taxes. You cannot avoid mortality, but you can manage taxes—especially in estate planning—accordingly. Everybody needs an estate plan—a will and a healthcare directive. For those with substantial wealth, however, anticipating future state and federal estate taxes requires more sophisticated strategies, like an irrevocable life insurance trust (ILIT).

An ILIT gives Dow Incorporated employees many advantages—it provides liquidity to pay estate taxes and other costs and flexibility to your heirs. Consider the benefits and operation principles of an ILIT for Dow Incorporated employees with substantial assets.

The Power of ILITs: Providing Liquidity and Flexibility

Estate taxes can be a big expense for your successors—and may require the sale of real estate or family businesses to raise cash. Using an ILIT can avoid such an administrative hurdle and possibly even the loss of valuable assets.

Most important in forming an ILIT is giving your heirs the flexibility to settle your estate. Your successors may cover estate taxes, debts, and other expenses without selling illiquid assets if they have life insurance policies in the trust. This not only protects their inheritance but also means they will be able to carry out your wishes and keep your possessions.

Assets held by the trust are not considered part of the estate for federal inheritance/estate tax purposes, which is one major advantage of an ILIT over individual life insurance policy ownership. This means your successors will pay no estate or inheritance taxes on the proceeds of your life insurance policy.

Who Needs an ILIT?

An ILIT is especially useful for:

They predict that their estate will be over the federal and/or state tax exemption limits.Anticipate that their successors will need cash from a non-liquid estate to pay taxes.Want to manage and secure an inheritance for minors, special-needs individuals, or those without financial experience.They want to avoid probate and keep their estate confidential.The intent is to shield insurance benefits from divorce, creditors, or other legal action against them or their beneficiaries.

Estate Strategies to Consider: A Changing Landscape

The 2017 Tax Cuts and Jobs Act lifted the federal estate tax exclusion to USD 12.92 million per individual or USD 25.84 million for a married couple using portability. While this historically high exclusion amount may lead some to question the need for an ILIT, tax laws are always changing. The federal estate tax exclusions will not stay where they are now. State estate tax exclusions may also be less, so there may be state estate tax liabilities even if federal taxes are escaped.

An ILIT can provide a number of tax benefits but should not be formed lightly. This is an expensive legal arrangement that requires the services of a lawyer and is complicated to set up and maintain. It is an irrevocable trust, meaning the grantor cannot generally revoke or amend its terms without complying with state law and trust provisions once it is established. For any state or federal estate taxes that may be applicable to your estate, you should speak with a tax advisor or estate planning attorney about an ILIT.

How an ILIT Works: Providing for Future Generations

The grantor purchases a policy of life insurance through an irrevocable trust, called an ILIT. For couples, typically a survivorship or second-to-die policy is selected, with the death benefit payable upon the death of the surviving spouse.

When the grantor or surviving spouse dies, the insurance proceeds are deposited into the ILIT and distributed to trust beneficiaries—usually children, grandchildren, or other relatives. The manner of distribution depends on the trust structure, which may allow beneficiaries to access the funds shortly after the insured dies or distribute the assets gradually over time.

Making Gifts Count: Premium Payments and Tax Considerations

The premium payments on ILIT policies are usually funded through gifts from the grantor. Any available annual exclusions from the federal gift tax are usually limited to beneficiaries withdrawing up to the annual exclusion amount (USD 17,000 in 2023 per grantor, per beneficiary) on their portion of the gift within a short time frame following a gift. Optimal use of this strategy requires that beneficiaries understand the estate planning objectives and consequences of withdrawing gifts.

How to Choose the Right Insurance and Trustee

Both term-life and permanent-insurance options, such as whole life and universal life, are available for the ILIT's life insurance. Since the ILIT is designed to pass wealth to heirs only if the policy is in force at death, many Dow Incorporated employees purchase permanent life insurance. Permanent plans offer coverage for life with a guaranteed death benefit, while term policies are age-limited.

When setting up an ILIT, research the financial strength of the life insurance company issuing the policy. Selecting a company with low premiums and high credit ratings offers peace of mind long-term. And a good trustee will help an ILIT run smoothly and responsibly.

Conclusion: Secure Your Wealth & Legacy

In conclusion, an Irrevocable Life Insurance Trust can be a valuable tool to protect your wealth, provide liquidity for your estate, and preserve your legacy as you wish. A constantly changing financial landscape means you need to protect your assets and provide for future generations. Work with estate planning attorneys and tax advisors to explore an ILIT tailored to your situation. And adding an ILIT to your estate plan might provide peace of mind and protection for your loved ones—whether you are approaching or are already retired.

In a 2023 AARP survey, 75% of Americans over age 60 worry that they will leave their relatives with a financial burden because of estate taxes and other expenses. An ILIT may be the best way to address these concerns. Including an ILIT in your estate plan gives your heirs the flexibility to resolve your estate and get cash without selling assets. It is a tax-savvy strategy that leaves the life insurance death benefits exempt from estate tax and easily transferred to your beneficiaries—protecting your legacy and securing your family's financial future.

See How Irrevocable Life Insurance Trusts Can Protect Your Wealth & Your Legacy. Learn how ILITs could help Dow Incorporated workers approaching retirement age and active retirees manage estate taxes. With the highest federal estate tax rate set to hit 40% in 2023, an ILIT could allow flexibility for heirs without having to fork over prized assets to pay taxes. Your trust assets are excluded from your estate for tax purposes, so your beneficiaries will not owe estate or inheritance taxes on life insurance death benefits. ILITs provide liquidity that protects insurance benefits from divorce, creditors, and legal actions. Crafted to protect your wealth and protect your financial future.

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A properly drafted irrevocable life insurance trust is like a financial structure built to last. An ILIT protects your wealth and loved ones from estate taxation and forced asset sales just as a fortress defends valuables from outside threats. Imagine it as an invisible shield preventing estate taxes from affecting your beneficiaries as your life insurance benefits are transferred to them. Permanence and tax advantages protect your family's financial future with an ILIT—leave a legacy of security and wealth.

Added Fact:

In a 2023 study by WealthManagement.com, many Dow Incorporated workers over age 60 still do not understand the potential benefits of Irrevocable Life Insurance Trusts (ILITs) in estate planning. A whopping 40% of respondents did not know that ILITs could be used to protect their wealth and legacy. That highlights the need to educate Dow Incorporated workers about ILITs—especially with rising estate tax rates. Learning about the benefits of ILITs will help such people secure their financial futures and provide for their families without paying excessive estate taxes.

Added Analogy:

Making a financial legacy is like constructing a strong fortress for your family. As a fortified castle protects its treasures from outside dangers, so an Irrevocable Life Insurance Trust (ILIT) is a shield against estate tax burdens. Imagine your riches and your legacy as castle treasures. Your ILIT is like an enormous fortress, keeping your assets safe and ensuring they reach your heirs intact. This fortress is essential—especially with rising estate tax rates. Understanding ILITs can help Dow Incorporated workers build this financial security for generations to come.

Sources:

1. Rosen, Richard. '7 Reasons for an Irrevocable Life Insurance Trust (ILIT).' Investopedia , 24 Oct. 2024. https://www.investopedia.com/articles/personal-finance/092315/7-reasons-own-life-insurance-irrevocable-trust.asp

2. Garza, Luis. 'How ILITs Help High Net Worth Families.' Garza Law Firm , Feb. 2025. https://lgarzalaw.com/how-ilits-help-high-net-worth-families

3. 'Irrevocable Life Insurance Trusts: Estate Planning Options.' Bogart Wealth , Sept. 2024. https://bogartwealth.com/irrevocable-life-insurance-trust-ilit

4. 'What Is an Irrevocable Life Insurance Trust (ILIT)?' Northwestern Mutual , Dec. 2023. https://www.northwesternmutual.com/life-and-money/what-is-an-irrevocable-life-insurance-trust

5. 'Can an ILIT Help Your Clients Prepare for the 2025 Estate Tax Sunset?' Life Insurance Trust Company , Mar. 2024. https://lifeinsurancetrustco.com/can-an-ilit-help-your-clients-prepare-for-the-2025-estate-tax-sunset

How does The Dow Chemical Companyâ€™s pension plan structure impact an employee's retirement benefits when considering different retirement ages? The Dow Chemical Company offers various options in its pension plan, and understanding these can significantly affect financial planning for retirement. An employee must weigh the benefits of retiring earlier with potentially lower monthly payments against the advantages of working longer and how this aligns with personal retirement goals and expectations.

The Dow Chemical Company’s pension plan and retirement ages: The Dow Chemical Company’s pension plan structure impacts employees' retirement benefits based on their retirement age. Retiring earlier results in lower monthly payments due to reduced service time and potential early commencement penalties, while working longer allows for more service accrual and higher monthly benefits. Employees must evaluate how these factors align with personal retirement goals, as choosing to retire early might not provide as much financial security as delaying retirement(The Dow Chemical Compan…).

What are the implications of the 20% mandatory withholding tax on lump-sum distributions from The Dow Chemical Company's pension plan, and how does the option to roll over affect an employeeâ€™s tax situation? Employees taking lump-sum distributions need to be cautious about this withholding rule as it can impact their immediate financial needs. Additionally, the rollover option provides a strategy to defer taxes, which can be crucial for long-term financial health. Employees should consider how to best utilize these rules in their personal financial planning.

20% mandatory withholding tax on lump-sum distributions: Lump-sum distributions from The Dow Chemical Company’s pension plan are subject to a 20% mandatory withholding tax if not directly rolled over into another qualified retirement plan. This tax can significantly impact an employee's immediate finances. However, opting to roll over the lump sum to a qualified plan defers taxation until funds are withdrawn, allowing employees to manage their tax liabilities better while continuing to grow their retirement savings(The Dow Chemical Compan…).

How does The Dow Chemical Company ensure that employees understand their eligibility for retirement benefits based on various service and age criteria? Eligibility considerations based on service years and age can significantly influence the retirement timeline for employees. Moreover, itâ€™s essential for employees to be well-informed about these factors to make educated decisions pertaining to their retirement and whether adjustments to their career plans are needed for maximizing benefits.

Eligibility for retirement benefits: The Dow Chemical Company outlines eligibility for pension benefits based on a combination of service years and age. Typically, employees become vested after three years of service or upon reaching age 65 while still employed. The company ensures that employees are informed about these eligibility criteria through various resources, such as the Dow Benefits Service Center, enabling them to make informed retirement decisions(The Dow Chemical Compan…).

In what ways can employees of The Dow Chemical Company appeal decisions regarding their pension benefits, and what processes are in place to facilitate these appeals? The appeal process is critical for employees who might feel that their benefits have not been administered correctly. Understanding the correct procedures and having access to the right resources can empower employees to effectively advocate for themselves in the face of administrative decisions.

Appealing pension benefit decisions: If employees believe there has been an error in the administration of their pension benefits, The Dow Chemical Company provides a formal appeal process. Employees can file a claim, and if denied, they have the right to appeal the decision. The Retirement Board oversees these appeals, and employees must follow the outlined procedures for their appeal to be considered(The Dow Chemical Compan…).

What strategies can employees of The Dow Chemical Company employ to maximize their pension benefits while transitioning to retirement? Employees must navigate complexities such as contribution limits, benefit formulas, and personal retirement savings. A strategic approach, which includes understanding the timing of retirement and how it interacts with pension claims, can lead to more favorable financial outcomes in their retirement years.

Maximizing pension benefits: Employees at The Dow Chemical Company can maximize their pension benefits by carefully planning their retirement timing. Key strategies include working longer to accrue more service years, reviewing contribution limits, and understanding the benefit formula used. Aligning personal savings and pension claims with the optimal retirement age can result in more favorable financial outcomes(The Dow Chemical Compan…).

How can retirees from The Dow Chemical Company navigate survivor benefits, and what are the eligibility criteria for spouses or domestic partners? Survivor benefits are an essential aspect of retirement planning, especially for employees concerned about providing for their loved ones after death. Itâ€™s vital for employees to understand both eligibility and what benefits their partners might receive, fostering peace of mind during retirement planning endeavors.

Survivor benefits for retirees: Retirees from The Dow Chemical Company can opt for survivor benefits to provide financial security for their spouses or domestic partners. Eligibility for these benefits depends on the plan's structure, and employees should understand the options available to ensure their loved ones are covered after their death. These benefits include continued monthly payments or lump-sum options depending on the election made at retirement(The Dow Chemical Compan…).

How does The Dow Chemical Companyâ€™s defined benefit pension plan differ from other retirement plans, and what should employees know when comparing their options? Employees need to understand the distinctions between defined benefit plans and other types such as defined contribution plans for effective retirement planning. This understanding will help them better appreciate the benefits and risks associated with their choices and aid with decision-making processes.

Comparing defined benefit pension plan: The Dow Chemical Company offers a defined benefit pension plan, which differs from defined contribution plans like 401(k)s. In a defined benefit plan, the company guarantees a specific monthly benefit upon retirement, typically based on years of service and salary, whereas defined contribution plans depend on employee contributions and investment performance(The Dow Chemical Compan…).

What resources does The Dow Chemical Company provide to employees seeking detailed information about their retirement options, and how can they effectively utilize these? Accessing the right resources can bridge knowledge gaps regarding pension plans. Employees should know about dedicated pathways to assistance, such as benefit service centers and consultation avenues, to fully leverage their benefits package.

Resources for retirement information: The Dow Chemical Company provides several resources for employees to access detailed information about their retirement options. The Dow Benefits Service Center and My HR Connection are key tools where employees can request pension estimates, understand payment options, and clarify eligibility criteria. These resources help employees make informed decisions regarding their retirement planning(The Dow Chemical Compan…).

With changes in IRS rules becoming increasingly relevant, how do employees of The Dow Chemical Company stay informed about updates that may impact their retirement savings? Employees need to be active participants in their retirement planning by staying abreast of legal and regulatory changes that can influence their financial strategies. Having a clear understanding of these regulations can help ensure compliance while maximizing possible financial benefits under updated laws.

Staying informed about IRS rules: Employees of The Dow Chemical Company must stay informed about IRS rules that may affect their retirement savings. Changes in tax laws, contribution limits, or distribution rules can significantly impact financial planning. The company provides updates and resources to ensure employees are aware of relevant regulatory changes that might affect their retirement strategies(The Dow Chemical Compan…).

How can employees of The Dow Chemical Company reach the benefits service center for additional inquiries regarding their pension plan, and what information should they prepare beforehand? Knowing how to contact the benefits service center is crucial for employees seeking clarity on their pension plan benefits. Preparing relevant information ahead of time can streamline the process, allowing for a more productive engagement with benefits specialists and ensuring that employees receive precise guidance tailored to their situations.

Contacting the benefits service center: Employees seeking clarification about their pension benefits can reach the Dow Benefits Service Center via phone or online through the Message Center. It is recommended to have personal identification and details of the pension plan ready to streamline the inquiry process. Proper preparation ensures a productive conversation with benefits specialists(The Dow Chemical Compan…).

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For more information you can reach the plan administrator for Dow Incorporated at 1919 torrance blvd Torrance, CA 90501; or by calling them at 900-999-1009.