Irrevocable Life Insurance Trusts

The Irrevocable Life Insurance Trust has previously been one of the most frequently used estate planning techniques. However with the advent of increased estate tax exemptions, their use has fallen dramatically. Now that we are faced with a return to pre-2001 estate tax exemption levels, it’s time to reacquaint ourselves with this technique:

The funds can be used to help maintain the family in their accustomed standard of living, to help liquidate debts and pay taxes, or help replace assets given to charity. Additionally, an irrevocable life insurance trust can be used to help create funds to equalize distributions where there is a family business with one or more children involved in the business and other children who are not, or in a second marriage situation where there is a desire to provide for the spouse while providing an advance distribution to children from a first marriage.

Benefits to the Family:

  •  Life insurance proceeds are kept out of the insured’s estate while providing estate liquidity free of death taxes.
  • The terms of the trust provisions control the distribution of the life insurance proceeds in a manner consistent with the insured’s overall estate objectives.
  • Trust provisions can be drafted to protect the trust assets from the creditors of the trust beneficiaries.

How to Implement:

  • The insured’s attorney drafts an irrevocable trust that has terms that will achieve the insured’s goals with respect to both the distribution and management of the trust assets.
  • The insured makes a gift to the trust in an amount sufficient to pay the premiums on a life insurance policy.
  • The trustee of the trust establishes a bank account and deposits the gift in the account.
  • The trustee of the trust is the owner and beneficiary of the life insurance policy.


The ILIT is an important estate planning tool – and we’re ready to assist.

Please Contact us with any questions.

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