Irrevocable Life Insurance Trusts (ILIT)
We’re here to help simplify and guide you through your journey.
CONTACT USAn Irrevocable Life Insurance Trust (ILIT) is a legal arrangement designed to own and manage life insurance policies and the proceeds from them. Once established, the trust is permanent and cannot be altered or revoked. ILITs are commonly used to reduce estate taxes, protect assets, and ensure that life insurance benefits are distributed according to the policyholder’s wishes.
How Does an ILIT Work?
The policyholder (known as the grantor) creates the trust and transfers ownership of a life insurance policy into it. Once the policy is owned by the ILIT, the trust becomes the beneficiary of the policy proceeds. At the time of the insured’s death, the trust receives the death benefit and distributes it according to the terms set by the grantor.
Since the ILIT owns the policy, the death benefit is excluded from the insured’s taxable estate, which can significantly reduce estate taxes.
Why Create an ILIT?
Estate Tax Reduction
By transferring the ownership of the policy to the trust, the death benefit is not included in the taxable estate, potentially saving millions in estate taxes.
Asset Protection
ILITs protect the death benefit from creditors and lawsuits, ensuring that beneficiaries receive the full amount.
Controlled Distribution
The trust allows you to specify how and when the funds are distributed to beneficiaries, offering control and protection for future generations.