An Irrevocable Life Insurance Trust (ILIT) can be an important component of a thoughtful estate plan for residents of Knightsen and the surrounding Contra Costa County communities. At the Law Offices of Robert P. Bergman, our approach is to help clients understand how an ILIT can remove a life insurance policy from a taxable estate, provide liquidity to pay estate obligations, and preserve assets for intended beneficiaries. This introductory overview explains what an ILIT does, typical reasons clients choose this planning tool, and how it fits with other documents such as wills, revocable living trusts, and powers of attorney.
Deciding whether an ILIT is appropriate depends on family circumstances, estate size, and long-term goals. Many clients in Knightsen consider an ILIT when they want to manage estate tax exposure, maintain privacy, or control distributions of policy proceeds over time. Establishing an ILIT involves legal drafting, trustee selection, and coordination with life insurance contracts, and it is important to set up the trust correctly to achieve the intended tax and control benefits. This paragraph outlines how we work with clients to evaluate an ILIT alongside other estate planning documents such as pour-over wills and financial powers of attorney.
An ILIT can provide multiple benefits including estate tax planning, creditor protection for policy proceeds, and orderly distribution to heirs. For many Knightsen families, life insurance proceeds placed in an ILIT deliver immediate liquidity that can cover taxes, administration costs, and debts without forcing the sale of real estate or other assets. Because the trust is irrevocable, assets transferred into it generally are not included in the grantor’s taxable estate, and the trustee can manage the proceeds according to specific distribution instructions. We assist clients in understanding these benefits, assessing whether they align with personal goals, and drafting documents to implement that plan effectively.
The Law Offices of Robert P. Bergman provides estate planning services across Contra Costa County, including Knightsen, with a focus on clear communication and practical solutions for families and individuals. Our team guides clients through creating documents such as revocable living trusts, wills, powers of attorney, and specialized trusts like ILITs, tailoring each plan to the client’s circumstances. We prioritize careful drafting and coordination with financial and insurance professionals to implement plans that address tax planning, asset protection, and the distribution of assets to heirs while keeping clients informed at each step of the process.
An ILIT is a separate legal entity established to own and administer life insurance policies outside of an individual’s taxable estate. To create an ILIT, the grantor transfers an existing policy into the trust or arranges for the trust to purchase a new policy, with the trust named as owner and beneficiary. The trust terms govern how proceeds are paid out to beneficiaries and can provide protections against creditors and divorce claims. We explain the process of funding the trust, the responsibilities of the trustee, and how gift tax considerations and Crummey withdrawal powers may affect the plan according to current law.
Establishing and maintaining an ILIT requires careful attention to formalities to ensure the intended tax treatment. For example, transfers of existing policies may be subject to a three-year lookback period for inclusion in the estate, and annual gift tax exclusion rules can influence how premiums are funded. Selecting an appropriate trustee, drafting distribution provisions, and coordinating with insurance carriers are important steps that determine whether the trust will function as intended. Our role is to discuss these requirements in plain language, evaluate timing and funding options, and prepare trust documents that reflect the client’s wishes and comply with legal standards.
An ILIT is a trust that holds life insurance policies for the benefit of named beneficiaries and is structured to remove policy proceeds from the grantor’s estate for tax purposes. The trust is irrevocable once created, meaning the grantor cannot unilaterally reclaim assets placed in it. Premiums can be paid directly by the grantor through gift transfers to the trust, often using annual exclusion gifts, and the trustee manages the policy and receives proceeds when the insured dies. The trust document controls distributions, which can be tailored to address issues like beneficiary maturity, creditor protection, and support for dependents.
Key components of an ILIT include a written trust agreement, designation of the trustee and successor trustees, funding mechanisms for premiums, and clear distribution instructions for policy proceeds. The process typically begins with an initial consultation to gather information about assets, insurance policies, and family goals. Next comes drafting the trust instrument, coordinating with insurance companies if an existing policy is to be transferred, and implementing a funding plan that may involve annual gift transfers or other arrangements. Ongoing administration includes recordkeeping, premium payments, and communication with beneficiaries as needed.
Understanding the terminology associated with ILITs helps clients make informed decisions. Terms such as grantor, trustee, beneficiary, annual exclusion, Crummey notice, and lookback period are commonly used when describing how an ILIT operates and how it interacts with tax rules. This section provides plain-language definitions and examples to clarify each concept and to show how they apply in real planning situations. Clear definitions help clients discuss options with trustees and financial advisors and ensure everyone involved understands the legal structure and administrative requirements.
The grantor is the individual who creates the ILIT and transfers the life insurance policy or funds to the trust. The grantor’s actions establish the trust terms and funding plan, but once assets are placed into an irrevocable trust they are generally no longer owned personally by the grantor. Understanding the grantor’s role helps clarify who initiates transfers, who may arrange premium payments, and how the trust will interact with the grantor’s overall estate plan. The grantor may also name trustees and beneficiaries in the trust document and can outline conditions for distributions.
The trustee manages the trust assets, including the life insurance policy, and acts according to the trust’s terms and applicable law. Responsibilities include paying premiums when funds are available, maintaining communication with the insurer, filing required notices for gifts, keeping accurate records, and making distributions to beneficiaries according to the grantor’s instructions. Choosing a trustee that can carry out those duties reliably and impartially is important because the trustee’s decisions will affect how and when proceeds are used to benefit the intended recipients.
Annual exclusion gifts allow individuals to transfer a limited amount each year to another person or to a trust without using up lifetime gift tax exemptions or triggering gift tax. When funding an ILIT, the grantor may make annual gifts to the trust to cover insurance premiums, and beneficiaries may receive Crummey notices that give them a temporary right to withdraw those gifts to qualify them for the annual exclusion. Properly documenting these gifts and any notices is important to sustain favorable tax treatment and to ensure premium payments are timely.
When an existing policy is transferred to an ILIT, the transfer may be subject to a three-year lookback period for estate tax purposes. If the insured dies within that period, the proceeds could be included in the deceased’s estate for tax calculation, potentially undermining the intended tax benefit of the trust. Understanding this timing rule helps clients decide between transferring an existing policy and having the ILIT acquire a new policy, and it informs planning choices regarding premium funding, policy ownership, and the timing of trust formation.
An ILIT differs from revocable living trusts and simple beneficiary designations in that it is irrevocable and focuses specifically on life insurance ownership and distribution rules. A revocable living trust offers flexibility and control during a grantor’s lifetime but does not remove assets from the taxable estate while the grantor retains powers over the trust. Beneficiary designations can transfer insurance proceeds directly but may offer less creditor protection or structured distributions. Comparing these options with the assistance of counsel and financial advisors helps clients choose an approach that meets liquidity, tax, and legacy objectives.
If a client’s total estate value is well below federal and state estate tax thresholds and potential creditors are not an immediate concern, a simple beneficiary designation or a revocable living trust might be sufficient to achieve goals such as providing liquidity and transferring assets efficiently. In these situations, the costs and permanence of an ILIT may outweigh the benefits. We help clients analyze asset values, projected estate tax exposure, and family needs to determine whether a lighter touch is appropriate, including drafting clear beneficiary forms and ensuring coordinated beneficiary designations.
When flexibility to modify the plan during the grantor’s lifetime is a priority, a revocable trust or direct beneficiary designation can offer the needed adaptability. Unlike an ILIT, a revocable trust can be amended or revoked as circumstances change, which may be preferable for clients concerned about changing family dynamics or shifting financial needs. We discuss how flexible tools can be used alongside other documents, and how they may be integrated with life insurance decisions without creating unintended tax consequences or exposing proceeds to estate inclusion.
For clients with significant assets, blended families, business interests, or unique beneficiary needs, a comprehensive planning approach can coordinate multiple tools to achieve consistent results. An ILIT may work in combination with revocable trusts, special needs trusts, or trusts for retirement assets to address tax planning and control distributions. Coordinating these instruments helps avoid conflicts, unintended tax outcomes, or gaps in protection. Our process evaluates each client’s full financial picture to design an integrated estate plan aligned with long-term goals and family considerations.
When maintaining control over how assets are used after death is a priority, combining an ILIT with other trust structures can provide tailored distribution rules and protections against creditors or beneficiaries’ creditors. Such coordination can preserve wealth for future generations, protect assets from claims, and ensure that proceeds support specific needs such as education or healthcare. We work with clients to draft precise trust language, consider trustee selection and successor arrangements, and implement measures that sustain the plan’s objectives across changing circumstances.
A coordinated planning strategy ensures that life insurance ownership, beneficiary designations, wills, and trusts work together to avoid unintended tax consequences and distribution problems. By aligning documents such as an ILIT, pour-over will, powers of attorney, and health care directives, clients can maintain continuity in decision-making and asset management. A comprehensive plan also addresses timing issues, funding mechanisms, and administrative processes so that funds are available when needed and that beneficiaries understand their rights and responsibilities under trust terms.
Taking a broad view of estate planning also facilitates communication with financial advisers, insurance agents, and family members, reducing the likelihood of disputes or misunderstandings after a death. Thoughtful coordination can minimize estate taxes, protect assets from avoidable claims, and create a predictable roadmap for distributing resources to loved ones. We assist clients in documenting instructions, updating beneficiary designations, and creating contingencies that reflect a client’s values and goals while complying with California law and practical administrative needs.
By using an ILIT together with other planning tools, clients can preserve liquidity to pay taxes, debts, and administration costs without forcing the sale of illiquid assets such as real estate or a family business. This approach can reduce the tax burden on heirs and maintain the value of legacy assets. Addressing the timing and funding of premium payments and contingency planning for potential estate inclusion rules are part of the process, and we provide guidance on how these measures support long-term financial stability for beneficiaries.
A well-drafted ILIT can direct how life insurance proceeds are used and protect those funds from creditors, spending by vulnerable beneficiaries, or unintended diversion. Trust provisions can stage distributions, appoint discretionary trustees to respond to changing needs, and set conditions for disbursements for education, health, or other specific purposes. This level of control helps ensure that the deceased’s wishes are carried out and that proceeds serve the intended legacy, supporting dependents and preserving wealth across generations.
Timing matters when transferring an existing life insurance policy into an ILIT because the three-year lookback period can affect whether the proceeds are included in the grantor’s estate if death occurs soon after transfer. For that reason, consider whether creating a new policy owned by the trust or waiting to transfer is the better option. Discuss options for premium funding and document annual gifts and any Crummey notices properly. Thoughtful timing and meticulous recordkeeping help ensure the trust operates as intended and supports the overall estate plan.
Ensure that insurance carriers, beneficiary designations, and estate planning documents are aligned so that ownership and beneficiary designations reflect the client’s intended planning structure. If a new policy is to be purchased by the ILIT, coordinate with the insurer to name the trust as owner and beneficiary. If existing policies are transferred, confirm the insurer accepts the change and understand implications. Regular reviews of documents and beneficiary forms help prevent conflicts and ensure that proceeds are distributed in accordance with the plan.
An ILIT may be appropriate when there is a desire to keep life insurance proceeds out of a taxable estate, provide liquidity to cover estate obligations, or ensure controlled distributions to beneficiaries over time. Residents of Knightsen with significant life insurance holdings, real estate, or business interests frequently consider ILITs to address potential estate tax exposure and to provide immediate funds for heirs without disrupting ownership of other assets. We discuss each client’s financial picture to determine whether an ILIT complements other documents such as wills and durable powers of attorney.
Families with beneficiaries who may need protected distributions, such as minors, persons with disabilities, or beneficiaries at risk of creditor claims, often benefit from the directed distribution features an ILIT can provide. Trust provisions can specify staggered distributions, conditions for release of funds, or discretionary trustee authority to respond to changing circumstances. By tailoring the trust to family dynamics and future contingencies, clients can create a legacy plan that supports their loved ones while preserving the value of life insurance proceeds for intended uses.
Common circumstances that lead clients to establish an ILIT include a sizable life insurance portfolio, concerns about estate tax exposure, the need to provide liquidity for estate administration, and a desire to control how proceeds are used by beneficiaries. Other factors include protecting proceeds from creditors, creating trusts for minor children, or coordinating life insurance ownership with business succession planning. We help clients evaluate whether these circumstances apply and how an ILIT interacts with other estate planning documents to meet their objectives.
When an individual owns significant life insurance relative to their total estate, an ILIT can keep those proceeds from being included in the taxable estate, subject to timing and transfer rules. This planning can be particularly relevant for residents with real estate, retirement accounts, or business interests that could push the estate toward tax thresholds. We examine asset values, coordinate ownership arrangements, and explain how premium funding and timing decisions affect the overall tax and distribution outcome for heirs.
Life insurance held in an ILIT can provide quick liquidity at the time of death to pay taxes, debts, and administrative expenses, helping prevent the forced sale of assets such as a family home or business. This is particularly important when illiquid assets form a large portion of the estate. Planning for adequate life insurance coverage and structuring distributions to meet expected obligations are part of the ILIT design process, and we help clients estimate needs and structure the trust accordingly.
Clients who want to protect life insurance proceeds for minors, beneficiaries with special needs, or individuals who may be subject to creditor claims often turn to ILITs to control timing and conditions of distribution. An ILIT can name a trustee with discretion to manage funds for health, education, maintenance, and support, or to establish structured distributions over time. We discuss the family’s needs, potential qualification for government benefits, and how trust provisions can balance protection with beneficiary access to resources.
We are available to assist Knightsen residents with the formation and administration of Irrevocable Life Insurance Trusts, providing clear guidance throughout the process. From explaining the benefits and trade-offs to drafting trust documents, coordinating with insurance carriers, and advising on trustee selection, our firm offers comprehensive support. We focus on practical planning solutions tailored to local clients, understanding California law and regional considerations. Contact us to schedule a consultation to review whether an ILIT fits your estate planning objectives and financial circumstances.
Clients choose our firm because we provide thoughtful, client-centered planning and attention to detail in drafting trusts and coordinating with other advisors. We help clients identify objectives, evaluate timing and funding choices, prepare trust instruments, and coordinate with insurers to ensure documents are properly implemented. Our approach emphasizes clear communication, careful recordkeeping, and practical advice that aligns with each client’s goals, family circumstances, and financial realities. We also provide ongoing support for trustees and beneficiaries after a trust is established.
When forming an ILIT, clients often face complex choices about ownership, premium funding, and distribution mechanics. We assist with preparing gift documentation, drafting Crummey notices when appropriate, and ensuring trustee powers are clear and workable. Our services include reviewing existing policies for transfer implications, designing funding strategies for premium payments, and integrating the ILIT with wills, pour-over documents, and powers of attorney to maintain a cohesive estate plan. We aim to make the process manageable and understandable for our clients.
Beyond initial formation, we can provide ongoing assistance with trust administration matters such as trustee guidance, recordkeeping, and coordination with beneficiaries and insurers when a claim arises. We help trustees understand their duties and assist beneficiaries in navigating distributions under the trust. Our goal is to support families through planning and administration phases so that the grantor’s intentions are carried out efficiently and respectfully, minimizing confusion and ensuring that trust assets are applied as directed.
Our process begins with a thorough consultation to learn about a client’s financial situation, family composition, and estate planning goals. We review current insurance policies, discuss funding strategies for premiums, and advise on trustee selection and trust language. After agreeing on a plan, we draft the trust instrument, coordinate any required transfers with insurers, and prepare supporting documentation such as beneficiary notices and gift records. Post-formation, we remain available to assist trustees with administration, communicate with beneficiaries, and make updates if circumstances change.
In the initial meeting we gather information about assets, existing life insurance policies, intended beneficiaries, and any unique family considerations. This discussion allows us to determine whether an ILIT is appropriate and to identify the best funding strategy for premiums. We also explain potential tax timing issues, trustee responsibilities, and how an ILIT will integrate with other elements of the estate plan. The outcome of this step is a tailored plan recommendation and a clear explanation of next steps.
We evaluate existing life insurance policies, ownership designations, and overall asset composition to understand how an ILIT would function within the broader estate plan. This includes assessing whether transferring an existing policy or having the trust purchase a new policy is preferable given the lookback period and estate inclusion rules. We also review retirement plans, real estate holdings, and any potential creditor concerns to design a coordinated approach that meets the client’s objectives and minimizes unintended outcomes.
We work with clients to design a funding plan for premiums that may involve annual exclusion gifts, other transfers, or direct payments coordinated with trustees. Trustee selection and successor arrangements are discussed to ensure reliable administration of the trust. Clear instructions for distributions and trustee powers are drafted to reflect the client’s wishes and practical needs. We also advise on documentation to support gift tax treatment and on processes for notifying beneficiaries when appropriate.
After agreeing on a plan, we prepare the trust document, draft necessary ancillary forms and notices, and coordinate with insurance carriers regarding ownership changes or new policy purchases. The trust document includes terms covering premium payments, trustee authorities, distribution standards, and contingencies. We ensure all paperwork is complete and that funding mechanisms are in place. Where transfers occur, we confirm the insurer’s requirements and assist with any forms needed to change ownership and beneficiary designations to name the trust properly.
The trust agreement is drafted to specify the trust’s purpose, trustee powers, distribution rules, and procedures for administration. Ancillary documents may include Crummey notices for annual gifts, transfer paperwork for existing policies, and written instructions for trustees regarding premium payments and recordkeeping. We focus on clear, enforceable language that reflects the client’s intentions and reduces ambiguity in enforcement. Properly drafted documents help trustees fulfill their duties and make the administration process more straightforward for all parties involved.
When an existing life insurance policy is transferred to the ILIT, we coordinate with the carrier to ensure the transfer is accepted and to understand any insurer-specific requirements. If the ILIT is to purchase a new policy, we work with agents to facilitate the application, medical underwriting if needed, and naming the trust as owner and beneficiary. This coordination helps avoid processing delays and ensures that the policy will be correctly owned by the trust, aligning the insurance arrangement with the trust’s legal structure and the overall estate plan.
Once the ILIT is established, administration includes paying premiums according to the trust’s funding plan, maintaining accurate records of gifts and notices, and managing policy interactions with insurers. Trustees may need guidance on annual filings, distribution decisions, and beneficiary communications. Regular reviews of the trust and related estate planning documents are recommended to account for changes in family situations, tax law updates, or alterations in financial circumstances. We offer support for trustees and beneficiaries to ensure the trust continues to serve its intended purpose.
We provide trustees with guidance on their administrative duties including maintaining premium payment records, tracking gift letters and Crummey notices, and handling communications with the insurance company and beneficiaries. Accurate recordkeeping helps substantiate tax treatments and provides clarity for beneficiaries during administration. We can assist trustees with standard procedures, documentation templates, and best practices to maintain an orderly record of the trust’s activities and to respond effectively to requests for information from beneficiaries or tax authorities when appropriate.
Estate plans should be reviewed periodically to reflect changes such as births, deaths, marriage, divorce, significant asset acquisitions, or changes in tax law. We recommend periodic reviews of the ILIT and related documents to ensure they continue to meet the client’s objectives and to update trustee or beneficiary designations as appropriate. These reviews help maintain alignment with the overall estate plan, address any administrative issues that have arisen, and incorporate modifications to funding strategies or trustee arrangements when necessary.
An Irrevocable Life Insurance Trust is a trust vehicle designed to own life insurance policies for the benefit of named beneficiaries, with the trust itself owning the policies and receiving proceeds upon the insured’s death. The grantor transfers an existing policy into the trust or arranges for the trust to purchase a policy, and the trustee manages the policy according to the trust instructions. Because the trust is irrevocable, properly structured transfers typically remove the policy proceeds from the grantor’s taxable estate, subject to timing rules such as the lookback period. The trust terms specify how proceeds will be distributed, providing options for immediate payment, staged distributions, or discretionary management by the trustee. Funding premiums often involves annual gifts to the trust, sometimes accompanied by notices to beneficiaries to qualify for the gift tax annual exclusion. Proper coordination with insurers and clear drafting of the trust are essential to ensure the desired tax and distribution outcomes.
Transferring an existing policy to an ILIT can be considered when the goal is to remove future proceeds from your taxable estate and provide structured distributions to beneficiaries. However, transfers are subject to a lookback period that may cause inclusion of the policy in the estate if the insured dies within a specified timeframe after transfer. We review factors such as the insured’s health, the policy’s value, and the timing of the transfer to determine whether transferring an existing policy or purchasing a new policy within the trust is the better option. Clients also consider transfers when they want to ensure proceeds are managed by a trustee, protected from creditor claims, or used according to specific distribution instructions. Coordination with the insurance carrier is necessary to confirm transfer procedures, and documentation of gift transfers for premium funding must be maintained to support the intended tax treatment and administration of the trust.
Premiums for policies owned by an ILIT are typically funded through gifts from the grantor to the trust, and trustees then use those gifts to pay the insurer. Many clients use annual exclusion gifts to move funds into the trust without using lifetime exemptions, and beneficiaries may receive brief withdrawal notices designed to qualify those gifts for the annual exclusion. Proper documentation of both the gifts and any notices is important to sustain favorable tax treatment and to demonstrate compliance with applicable rules. Alternatives for funding premiums include making larger gifts that use lifetime exemptions or having other trust assets available to cover premiums. The funding strategy should balance tax planning, cash flow needs, and the grantor’s intent for continued financial support. Clear communication between the grantor, trustee, and insurance provider helps ensure timely premium payments and continuous policy coverage.
The three-year lookback period refers to a rule that may cause a life insurance policy transferred into an ILIT to remain includable in the grantor’s taxable estate if the insured dies within three years of the transfer. This rule is intended to prevent the use of transfers shortly before death to avoid estate inclusion. When considering transferring an existing policy, it is important to weigh the timing risk and potential alternative strategies, such as having the ILIT purchase a new policy instead of transferring an existing one. Understanding the lookback period helps clients make informed decisions about when and how to implement an ILIT. We review life expectancy, policy values, and the client’s overall estate plan to recommend the most appropriate course of action. Planning can take into account funding methods and timing to reduce the potential for adverse inclusion while meeting the client’s goals.
An ILIT can provide a layer of protection for life insurance proceeds from certain creditor claims and other potential claims, depending on the trust terms and timing of transfers. Because the trust owns the policy and controls distributions, proceeds distributed to beneficiaries under trust rules may be insulated from some types of creditor access. However, the level of protection can depend on jurisdiction-specific rules, the timing of transfers, and the nature of any creditor claims, so careful drafting and administration are required to achieve intended protections. In family law contexts, protections can vary depending on whether proceeds are distributed outright or remain under trustee control; trust design can limit direct access to funds by a beneficiary’s spouse or creditors. As part of the planning process, we analyze potential exposure and design trust provisions that balance creditor protection with the grantor’s desire for beneficiary access, while complying with applicable California law and procedural requirements.
Selecting a trustee for an ILIT involves balancing reliability, administrative ability, and impartiality. A trustee could be a trusted family member, a friend, a professional fiduciary, or a financial institution, each of which brings different strengths and considerations. The trustee must be comfortable handling premium payments, working with insurance providers, keeping accurate records, and following the trust terms for distributions. Naming a successor trustee and clear guidance in the trust document helps ensure continuity if the primary trustee is unable to serve. When choosing a trustee, consider the trustee’s willingness to serve, organizational skills, and availability to manage trust affairs over time. We advise clients on drafting trustee powers and limitations to assist trustees in performing their duties while reducing the risk of conflicts or administrative errors. Clear instructions and contingency planning in the trust document make trustee transitions smoother and support faithful administration of the trust.
An ILIT should be coordinated with other estate planning documents to ensure consistent results when assets are distributed and when decisions are made at life moments such as incapacity or death. Documents such as revocable living trusts, pour-over wills, powers of attorney, and advance health care directives form an integrated plan with complementary functions. For example, a pour-over will can direct assets not already in trust to a revocable trust, while an ILIT will specifically govern insurance proceeds and their distribution according to the grantor’s objectives. Coordination reduces the risk of conflicting beneficiary designations or unintentional estate inclusion. We review all existing documents and beneficiary forms to align ownership and beneficiary designations with the ILIT structure, provide recommendations for updates, and draft trusts to operate consistently with the client’s broader plan. Regular reviews ensure the documents remain synchronized as circumstances and laws change.
Common pitfalls when forming an ILIT include failing to document gift transfers or Crummey notices correctly, transferring policies too close to the grantor’s death, and not coordinating beneficiary designations and insurer requirements. Such missteps can undermine the intended tax or protective benefits of the trust. Ensuring timely premium funding, maintaining clear records, and confirming insurer procedures for ownership changes are essential to avoid administrative problems and to achieve the planned outcomes for beneficiaries and the estate. Another frequent issue is selecting trustees without providing clear instructions or successor arrangements, which can create confusion or disputes during administration. Trust language that is vague about distributions or trustee powers can lead to unintended results and increased costs for beneficiaries. Careful drafting, review, and communication with trustees and beneficiaries reduce the likelihood of these pitfalls and support smoother trust administration.
Once a life insurance policy is owned by an ILIT, beneficiary designations are made to the trust rather than to individual persons, so changes in beneficiary designations must be made through trust amendments or by adjusting the trust’s distribution terms according to the trust document. If the policy is transferred into the trust, beneficiaries named under the trust will receive proceeds according to trust provisions rather than through insurer beneficiary designations. This structure helps enforce the grantor’s distribution preferences and provides trustee-driven administration of benefits. Maintaining alignment between insurer records and the trust document is important, so any change that affects ownership or beneficiary designations should be coordinated with the trustee and the insurer. We assist clients in documenting changes and ensuring that trust terms and insurance records are consistent, thereby avoiding surprises or disputes when a claim is made and benefits are due to be distributed.
Periodic review of an ILIT and the broader estate plan is recommended, typically every few years or whenever significant life events occur such as births, deaths, marriages, divorces, business transactions, or large changes in asset values. Regular reviews help confirm that the trust’s terms, trustee arrangements, and funding strategies continue to align with the grantor’s objectives and changing legal or tax considerations. These reviews also provide an opportunity to update supporting documents and verify that all administrative processes are functioning properly. Because laws and personal circumstances can change, revisiting the plan helps identify any needed adjustments to trustee powers, distribution terms, or coordination with other estate planning instruments. We offer periodic assessments and welcome clients to request reviews as events arise so that the ILIT remains effective and consistent with current goals and legal frameworks.
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