Jim and Anne, ages 65 and 60 respectively, have a very successful business that has been valued at $30 million and they have 2 children named Joe and Jen. Their business is jointly run, and both are key people in the business. They do believe that if one of them passes away, the business can still be run successfully with only one of them. They also want to leave the business to their kids eventually as the kids also have a passion for the business and Jim and Anne think the kids can successfully run the business too.

In addition to the business asset, they have other assets as indicated in the list below (they have no liabilities):

Asset Description	Owner	Amount
Investment account	JTWROS	$ 2,500,000.00
IRA	Jim	$ 1,500,000.00
IRA	Anne	$ 2,000,000.00
Cash Value Life Insurance Policy	Jim (Insured is Jim)	$ 300,000.00
Business	JTWROS	$30,000,000.00
Home	JTWROS	$ 1,000,000.00
Personal property	JTWROS	$ 200,000.00
Total assets		$37,500,000.00

Jim and Anne are concerned about having to pay estate taxes being that their assets are over the unified credit amount of $11.2 million each and that the major asset of their business is not liquid. Their intentions are to leave their assets evenly among the 2 children upon the death of both Jim and Anne. They have come to you to discuss the concept of an Irrevocable Life Insurance Trust which they know little about. They are not sure if it makes sense for them to implement the ILIT estate planning strategy or not and you are to assist them in understanding an ILIT.

For you to assist Jim and Anne, you need to show them the following (address these issues in your case study submission):

1. What is the potential estate tax owed based upon the value of their assets and considering the utilization of the unified credit for each spouse which they have not used any of the unified credit yet (use the excel spreadsheet in the assignment to assist if you like)?
2. In using an ILIT, what is the amount of insurance you they should purchase, and should the insurance be on each life or be a second to die policy?
3. They want to know the pros and cons of using an ILIT and how it will help them based upon their family situation.
4. They heard something about these Crummey Powers and they are unsure what it all means. You need to explain the rationale for using the Crummey Powers to take the annual gift exclusion.
5. Showing a diagram with explanations of how an ILIT works would benefit Jim and Annes understanding of the ILIT strategy.

Do you recommend that Jim and Anne consider using an ILIT?