An Irrevocable Life Insurance Trust (ILIT) can be a powerful tool for managing life insurance proceeds, protecting assets from estate taxation, and providing for loved ones in a controlled way. At the Law Offices of Robert P. Bergman, we help residents of Kerman and Fresno County evaluate whether an ILIT fits their broader estate plan. This introductory discussion explains basic concepts, how an ILIT operates, and the primary considerations for setting up and funding a trust. If you are considering moving a life insurance policy into trust, understanding the foundational steps is the first stage toward a sound plan.
Setting up an ILIT requires careful coordination of legal documents, life insurance ownership, and gifting strategies to ensure the trust functions as intended. This includes selecting a trustee, determining beneficiaries, and establishing trust terms that reflect your goals for distribution and control. Proper timing and funding of the trust are essential to achieve tax benefits and avoid unintended estate inclusion of policy proceeds. Our office can walk you through the practical and legal implications so you can make an informed decision that aligns with your family’s financial and personal priorities.
An ILIT matters because it offers a clear structure for managing life insurance proceeds outside of a taxable estate while giving the grantor control over how proceeds will be handled for beneficiaries. Key benefits include potential reduction in estate tax exposure, preserving liquidity for estate settlement costs, and protecting proceeds from certain creditor claims when properly drafted and administered. In addition, an ILIT can provide for staggered distributions or lifetime income payments to beneficiaries, ensuring that life insurance proceeds are used in a manner consistent with your goals rather than being subject to outright distribution or immediate consumption.
The Law Offices of Robert P. Bergman serves families in California from an approach grounded in practical planning and client-focused service. We bring years of experience advising on wills, trusts, and related estate planning tools, including ILITs, pour-over wills, health care directives, and guardianship nominations. Our attorneys work directly with clients to understand family dynamics, financial objectives, and concerns about taxes or creditor protection. We focus on creating reliable documents and clear funding instructions so the transition and administration after a client’s passing go as smoothly as possible for those left behind.
An ILIT is a trust that holds ownership of a life insurance policy and receives the policy proceeds at the insured’s death. Once established, the trust becomes the policy owner and beneficiary, and the grantor makes gifts to the trust to cover premium payments. These gifts are often structured to qualify for the annual gift tax exclusion, and in many cases the trust includes withdrawal powers to preserve that treatment. Properly funded and timed, an ILIT can exclude the death proceeds from the insured’s taxable estate and provide liquidity to pay estate obligations or distribute benefits to named beneficiaries according to the trust terms.
Key considerations involve selecting a trustee who can administer the policy and handle claims, drafting trust provisions that control distributions, and ensuring gifts for premiums are made in a manner consistent with tax rules. It’s also important to understand the three-year rule: if the grantor transfers an existing life insurance policy to the trust and dies within three years, the proceeds may still be included in the taxable estate. For these reasons, timing, funding strategy, and precise document language must be coordinated carefully with other estate planning instruments.
An Irrevocable Life Insurance Trust is a trust that cannot be modified or revoked by the grantor after it has been established under its terms, and that holds life insurance policies owned by the trust. The trust is designed so that life insurance proceeds will be payable to the trust rather than directly to named beneficiaries, allowing the trustee to manage distributions and preserve benefits for those intended. The grantor generally relinquishes ownership rights to the policy, which is why the trust is described as irrevocable. The arrangement provides a measure of control, liquidity, and potential tax planning advantages when structured in coordination with other elements of an estate plan.
Key elements of an ILIT include the trust document itself, the appointment of a trustee, naming of beneficiaries, and the mechanism for funding the trust to cover premiums. The grantor either has the trust purchase a new policy or transfers ownership of an existing policy into the trust. Gifts are made to the trust to pay premiums; these gifts may be structured as present interest gifts using withdrawal powers for beneficiaries to qualify for the annual exclusion. The trustee must manage trust assets, pay premiums, file claims on death, and distribute proceeds according to the trust’s terms, all of which require clear instructions and ongoing recordkeeping.
Understanding common terms can clarify the ILIT process. Definitions address the roles and mechanics encountered when establishing and administering a life insurance trust. These include grantor, trustee, beneficiary, funding, gifts for premiums, annual gift tax exclusion, and the three-year inclusion rule. Familiarity with this vocabulary helps clients make informed decisions about trust language, funding timing, and trustee selection. Clear definitions also help beneficiaries and trustees understand their responsibilities and how distributions will be handled when a claim is made on the insurance policy.
The grantor is the person who creates the trust and transfers assets or ownership to the trust. In the context of an ILIT, the grantor is typically the insured individual who establishes the trust to hold a life insurance policy. After creating the trust, the grantor generally gives up control over the policy ownership and must follow the trust’s funding and gifting procedures. The grantor still may influence the trust’s terms at the time of drafting and can select a trustee, set distribution standards, and name beneficiaries. Clear drafting at formation is essential because the trust is intended to be irrevocable.
The trustee is the person or institution appointed to manage the trust, hold legal title to the policy, and carry out the trust’s terms. Duties include handling premium payments, filing insurance claims, and making distributions to beneficiaries under the trust’s instructions. A trustee must keep accurate records and act in the best interests of beneficiaries in accordance with the trust document and applicable law. Choosing a trustee who is trustworthy and capable of administrative tasks is an important decision that affects how smoothly the trust operates over time.
A beneficiary is a person or entity entitled to receive benefits from the trust when the insured passes away or upon other triggering events defined in the trust. In an ILIT, beneficiaries may be family members, charities, or other designated individuals or organizations. The trust document determines whether beneficiaries receive lump sums, periodic payments, or other forms of distribution, and may set conditions or timing for distributions. Proper naming and clear instructions help avoid disputes and ensure that proceeds are used according to the grantor’s intentions.
Funding an ILIT generally involves making gifts to the trust to cover insurance premiums, either through annual gifts that qualify for the gift tax annual exclusion or through larger contributions that may require tax planning. When premiums are paid using gifts from the grantor to the trust, the trustee uses those funds to maintain the life insurance policy. Careful structuring of gifts and documentation of their receipt is necessary to ensure proper tax treatment and to preserve the intended estate planning benefits. Timing and consistent funding practices are crucial to achieving desired outcomes.
When deciding whether an ILIT is the right choice, it helps to compare it with other estate planning tools like keeping a policy outright, using a revocable trust, or relying on beneficiary designations. Keeping a policy outside trust can be simpler but may expose proceeds to estate taxes or creditor claims. A revocable trust offers flexibility during life but may not achieve the same estate tax exclusion for life insurance proceeds. An ILIT provides a targeted method to manage policy ownership and distribution, with trade-offs related to control and irrevocability. Each option requires consideration of tax, creditor, and family planning goals.
A more limited approach may make sense for individuals whose estate size and asset mix do not create significant estate tax concerns or for those who prefer minimal ongoing administration. If a life insurance policy is intended solely to pay final expenses or small debts, maintaining the policy outside of a trust may be sufficient. Additionally, for families with straightforward beneficiary designations and limited creditor exposure, the added complexity of an ILIT might not be necessary. Evaluating current assets, projected estate value, and family circumstances helps determine whether a simpler path is preferable.
A limited approach can also be appropriate when the life insurance is intended mainly for short-term protection or when plans are expected to change in the near future. For example, if the policy will be replaced, surrendered, or otherwise altered within a short period, transferring it into an irrevocable structure may not align with the grantor’s needs. In such cases, keeping the policy personal and ensuring beneficiary designations are updated can provide needed flexibility while maintaining basic coverage for dependents during the interim period.
A comprehensive approach is usually warranted for larger or more complex estates where minimizing tax exposure and coordinating multiple planning tools is important. When assets include real estate, business interests, retirement accounts, or multiple insurance policies, an ILIT should be integrated with wills, revocable trusts, beneficiary designations, power of attorney documents, and health care directives. This coordination helps avoid unintended tax consequences, conflicting instructions, or gaps in coverage that could complicate administration and diminish the value passed to intended beneficiaries.
When family goals include long-term wealth preservation, creditor protection, or structured distributions for beneficiaries, a comprehensive plan provides a consistent framework to achieve those aims. An ILIT can be tailored to deliver proceeds in ways that support education, healthcare needs, ongoing financial security, or continued management of assets through trust provisions. Drafting trust terms to reflect these family objectives, along with clear instructions about trustee powers and successor arrangements, reduces ambiguity and helps ensure that proceeds are used in line with the grantor’s intentions over time.
Including an ILIT in a broader estate plan can provide multiple benefits beyond tax considerations. It creates a mechanism for controlled distributions, preserves liquidity to pay estate obligations, and can protect proceeds from certain claims when trust terms are properly drafted. An ILIT can also accommodate charitable giving or provide for family members with special financial needs through tailored distribution rules. By integrating the trust with other estate planning documents, you reduce the likelihood of conflicting instructions and make post-death administration more predictable for trustees and beneficiaries alike.
A comprehensive approach also addresses succession and contingency planning through clear appointment of successor trustees, instructions for policy replacement or handling of premiums, and coordination with beneficiary designations on retirement accounts and other payable-on-death assets. This coordination helps minimize delays, administrative costs, and disputes by providing a single roadmap for asset distribution. Thoughtful drafting and consistent funding protocols help preserve the value of insurance proceeds for intended recipients and provide a reliable path for trustees to follow after the insured’s death.
One of the primary motivations for an ILIT is to manage potential estate tax exposure while providing liquidity for estate settlement costs and other obligations. When the trust properly owns the life insurance and the grantor has not retained incident of ownership, the proceeds can be excluded from the taxable estate under federal and applicable state rules, subject to timing and other technical requirements. This can preserve capital for beneficiaries and prevent forced sales of estate assets to cover tax liabilities or debts, allowing the family to maintain important holdings such as a home or closely held business.
An ILIT allows the grantor to direct how proceeds will be distributed, whether in lump sums, staged payments, or as discretionary distributions managed by the trustee. This level of control can protect beneficiaries from imprudent spending, provide for minors or individuals with special needs through tailored provisions, and help preserve assets from certain creditors. The trust can include safeguards and conditions that reflect family circumstances, such as educational support, health care funding, or restrictions that prevent direct inheritance from being dissipated quickly after receipt.
Make sure policy ownership and beneficiary designations align with the goal of having the trust receive the proceeds. Transferring ownership of an existing policy into the trust requires careful documentation and may trigger timing rules that affect estate inclusion. If you are purchasing a new policy, the trust should be in place before the application and ownership assignment to avoid complications. Documentation of gifts used to pay premiums is important for tax records and to demonstrate that funds were properly transferred to the trust for that purpose.
When gifting money to the trust for premium payments, structure contributions to take advantage of the annual gift tax exclusion where possible. Many ILITs use withdrawal powers for beneficiaries to create present interest gifts that qualify for the exclusion. Proper recordkeeping of gift amounts and beneficiary notices is necessary to support that treatment. If larger gifts are planned, coordinate with an overall tax and estate plan to understand any reporting or valuation implications. Consistent funding helps the trust maintain coverage and preserve anticipated benefits for beneficiaries.
You might consider an ILIT if you are concerned about estate tax exposure, want to ensure life insurance proceeds are managed for beneficiaries, or need to provide liquidity to cover estate obligations without forcing asset sales. Individuals with significant life insurance holdings, business owners who need to preserve operating capital for successors, or those who wish to protect proceeds from certain creditor claims can benefit from the structure an ILIT provides. Evaluating family needs, projected estate value, and the desire for controlled distributions will help determine if this tool fits your overall plan.
An ILIT may also be appropriate when beneficiaries would benefit from managed distributions, such as minor children, family members with limited financial skills, or relatives with special needs where continued support is necessary. It can facilitate charitable giving strategies tied to life insurance as well. Before making a decision, consider the loss of direct ownership and the trust’s irrevocable nature, coordinate the ILIT with existing wills, powers of attorney, and health care directives, and ensure funding plans are sustainable for future premiums and policy maintenance.
Common circumstances include larger estates facing potential estate tax, families seeking protection for life insurance proceeds, business succession needs where liquidity is required at death, or situations where beneficiaries require managed distributions. An ILIT is also used when the insured wants to direct proceeds for specific purposes such as education, care of a dependent, or charitable donations. It is helpful in scenarios where a straightforward beneficiary designation could result in unintended distribution or where creditor concerns justify holding proceeds within a trust structure.
When a client’s overall estate may approach levels where federal or state estate tax becomes a concern, an ILIT can be an effective method to remove life insurance proceeds from the taxable estate. This helps preserve capital for heirs and avoids the need to liquidate assets to satisfy tax liabilities. Timing and proper relinquishing of ownership are essential to secure this benefit, and it should be coordinated with the rest of the estate plan to ensure consistent treatment across all assets and beneficiary designations.
Clients who are concerned about potential creditor claims against beneficiaries or the insured’s estate may prefer to have life insurance proceeds held and distributed by a trust. Properly drafted trust provisions can provide a measure of protection against some creditors depending on the circumstances and applicable law. Holding proceeds in trust allows for distribution rules that limit direct access and may help shield resources intended for long-term family needs or business continuity from being claimed inappropriately by third parties.
An ILIT is well suited for providing structured financial support to minors, dependents with special needs, or beneficiaries who may not manage large sums responsibly. The trust instrument can require the trustee to make distributions for support, education, and medical needs, or set specific schedules for payout. This structure ensures proceeds are used in a way that aligns with the grantor’s intentions and offers continuity of care and financial support without requiring court involvement or immediate outright distributions that may not serve long-term family objectives.
The Law Offices of Robert P. Bergman is available to advise residents of Kerman and Fresno County about whether an ILIT fits their estate planning goals and to help implement the required documents and funding plan. We can explain how an ILIT interacts with wills, revocable trusts, powers of attorney, and health care directives such as HIPAA authorization and advance health care directives. Our goal is to prepare documents that reflect your wishes, provide clear administration instructions, and reduce potential confusion for families after a death occurs.
Our practice focuses on practical estate planning solutions tailored to each family’s circumstances. We combine knowledge of trust and estate mechanics with careful drafting to address tax considerations, funding logistics, and beneficiary protection. Clients appreciate the attention to detail we bring when integrating ILITs with revocable living trusts, pour-over wills, and other planning tools. We also provide guidance on related documents such as financial powers of attorney and HIPAA authorizations so your overall plan is coordinated and ready for life’s changes.
We assist with selecting appropriate trustees, preparing clear funding instructions for premium payments, and advising on gift tax considerations tied to annual exclusions. Our team prepares trust language to reflect distribution preferences, protections for beneficiaries, and successor arrangements. We also assist in practical matters like transferring existing policies and documenting gifts. Our approach seeks to reduce administrative burden for families during a difficult time by making post-death processes as straightforward as possible through careful planning in advance.
Clients receive candid guidance about the trade-offs involved in an irrevocable arrangement and how an ILIT fits within a larger plan of wills, trusts, and trust-related petitions. When additional actions are needed, such as trust modification petitions, Heggstad petitions, or certification of trust preparation, we handle the required filings and communications with insurers and financial institutions. Our firm remains available to answer follow-up questions and assist trustees and beneficiaries with administrative tasks after a claim is paid to the trust.
Our process begins with a detailed planning meeting to learn about your family, assets, beneficiary needs, and goals for life insurance proceeds. From there we draft trust documents, coordinate policy ownership and beneficiary designations, and prepare funding instructions for premium gifts. We review trustee selection and draft any ancillary documents needed for integration with wills, living trusts, and powers of attorney. After execution, we provide clients with a clear checklist for funding the trust and maintaining records to support tax and administration needs, and remain available for future adjustments as circumstances change.
The first stage is an in-depth consultation to establish objectives for life insurance proceeds, identify potential issues with estate taxes or creditor exposure, and determine whether an ILIT is an appropriate tool. We review existing insurance policies, ownership and beneficiary designations, and other estate planning documents such as revocable trusts and wills. Understanding family dynamics, financial responsibilities, and long-term goals helps us recommend the right trust structure and draft terms that align with your wishes while addressing practical considerations for funding and administration.
During this review, we examine current life insurance policies, beneficiary designations, and any related ownership issues that could affect whether proceeds will be included in an estate. We also assess wills, revocable living trusts, powers of attorney, and advance health care directives to ensure consistent instructions across all documents. This thorough review identifies potential conflicts or timing concerns, such as whether transferring a policy into a trust would trigger estate inclusion within a specified period, and allows us to craft a coordinated plan to address these matters.
We develop a plan for funding premium payments to the trust that considers annual gift tax exclusions and records required to support tax treatment. This may include drafting beneficiary notice language or withdrawal powers designed to qualify gifts as present interest gifts, along with instructions for consistent gift amounts and documentation. The goal is to ensure the trust maintains the necessary premium payments while preserving desired tax treatment and minimizing administrative burden for the grantor and appointed trustee.
Once planning decisions are made, we draft trust documents tailored to the agreed terms, including instructions for the trustee, distribution provisions, and mechanisms for funding and premium payments. We prepare any related documents, such as a pour-over will, HIPAA authorization, financial power of attorney, or guardianship nominations where relevant. After review and client approval, we guide the execution of documents to ensure they are signed, witnessed, and notarized as required by law, and prepare instructions for transferring ownership of existing policies if applicable.
If an existing policy is being transferred, we coordinate with the insurance company and handle paperwork to assign ownership to the trust. For new policies, we ensure the trust is in place before issuance and advise on naming the trust as owner and beneficiary on the application. These actions must be documented carefully to avoid surprises that could affect estate inclusion or tax treatment. We also prepare a funding schedule and gift documentation to support payment of premiums from the grantor to the trust.
After document signing, we provide trustee orientation materials and instructions covering premium payment procedures, recordkeeping, and claim filing steps. We explain how to maintain trust records, track gifts, and manage distributions in line with the trust’s terms. Providing trustees with an organized packet of documents, contact information for insurers, and a checklist of responsibilities helps reduce confusion and ensures the trust can be administered efficiently should the need arise.
Following establishment and funding, regular review of the ILIT and related estate planning documents is recommended to ensure continued alignment with changing circumstances, such as changes in family structure, financial position, or tax law. We can assist in periodic reviews, update funding plans for premium increases, and help trustees with administration when life events occur. Ongoing communication between clients, trustees, and advisors helps maintain the trust’s effectiveness and ensures beneficiaries receive the intended benefit in a timely and organized manner.
Periodic review is important to confirm that the trust remains properly funded and that any changes in insurance needs, premium amounts, or family circumstances are addressed. Reviews also consider whether beneficiary designations across other accounts remain consistent with the trust’s terms. We advise on adjustments or additional planning instruments when necessary to preserve intended outcomes without jeopardizing the trust’s structure or tax benefits.
When a claim is filed upon the insured’s passing, trustees often need assistance gathering documents, submitting proof of death, and processing the claim with the insurer. We provide guidance to trustees on preparing the claim packet, locating beneficiary information, and following the trust’s instructions for distribution. Our involvement helps expedite receipt of proceeds and supports trustees in making distribution decisions that comport with the trust terms and the grantor’s original intentions.
An Irrevocable Life Insurance Trust is a trust that holds a life insurance policy and receives the policy proceeds at the insured’s death. The trust is created by the grantor and, once established and funded, the policy is owned by the trust and the trustee manages the policy and disburses proceeds according to the trust’s terms. By placing ownership in the trust and following funding protocols, the proceeds may be kept out of the grantor’s taxable estate, subject to timing and other legal requirements. The trust operates through a combination of trust language, trustee duties, and funding practices. The grantor typically gives annual gifts to the trust that the trustee uses to pay premiums. Beneficiaries receive proceeds as directed by the trust terms, which can include lump-sum payments, staged distributions, or discretionary payments for education or support. Proper documentation and administration are essential to preserve intended outcomes and provide clarity for trustees and beneficiaries.
An ILIT can aid estate tax planning by separating life insurance proceeds from the grantor’s estate, which may reduce estate tax exposure for larger estates when properly executed and funded. The trust must hold ownership of the policy and the grantor must not retain incidents of ownership; otherwise, the proceeds may be included in the taxable estate. Timing matters, because transfers of existing policies may be subject to rules that include proceeds in the estate if death occurs within a certain period after transfer. Implementing an ILIT as part of a comprehensive plan requires coordination with other estate planning instruments and careful attention to gift and tax rules. Proper structuring of gifts to fund premiums and meticulous documentation of those gifts help support the intended tax treatment. Consulting with an attorney to align the ILIT with the broader estate plan reduces the risk of unintended tax consequences and achieves more predictable results for beneficiaries.
Yes, it is often possible to transfer an existing life insurance policy into an ILIT, but the transfer must be handled carefully to address potential tax implications. If the grantor transfers an existing policy and dies within a specific period after transfer, the policy proceeds may still be included in the grantor’s estate for tax purposes. To avoid this outcome, many clients either create the ILIT well in advance of any expected need or acquire a new policy directly owned by the trust from the outset. The mechanics of transferring an existing policy involve coordinating with the insurance company to assign ownership to the trust and documenting the transaction. It is also important to update beneficiary designations and confirm that the trust is properly recognized as owner. Detailed records of gifts for premiums and consistent funding practices help uphold the trust’s intended function and provide clarity for trustees and beneficiaries after the insured’s death.
Selecting a trustee involves balancing administrative ability, trustworthiness, and impartiality. Common choices include a trusted family member, close friend, or a professional fiduciary such as a bank trust department or independent trustee. The trustee should be capable of handling premium payments, maintaining records, filing claims, and following the trust’s distribution instructions. Naming successor trustees provides continuity if circumstances change or the initial trustee becomes unable to serve. When selecting a trustee, consider whether that person or entity can act without conflict and communicate effectively with beneficiaries. Providing written guidance and orientation materials at the time of trust formation reduces the risk of miscommunication and helps the trustee execute duties smoothly. Clear succession planning for trusteeship is also helpful to avoid administrative delays in the future.
Premium payments to an ILIT are typically funded through gifts from the grantor to the trust, which the trustee then uses to pay insurance premiums. To benefit from the annual gift tax exclusion, contributions are often structured as present interest gifts using limited withdrawal powers that allow beneficiaries a short window to withdraw contributions. Properly executed, this technique can help gifts qualify for the annual exclusion, reducing the need to use lifetime gift tax exemptions. Documentation is important to show that gifts were received by the trust and used for premium payments. The trustee should keep thorough records of gift receipts, premium payments, and communications with beneficiaries. Consistent recordkeeping supports tax reporting and provides a clear paper trail for trustees to follow when administering the trust and paying premiums over time.
The three-year rule refers to a timing provision that may cause life insurance proceeds to be included in the grantor’s estate if the grantor transferred ownership of a policy within three years of death. For existing policies that are reassigned to an ILIT, this rule can prevent the desired estate tax exclusion if the transfer occurs too close to the grantor’s death. Because of this, many planners recommend creating an ILIT and funding it well in advance of any anticipated need when transferring existing coverage is involved. When setting up an ILIT, it is important to consider timing and whether obtaining a new policy issued directly to the trust may be a preferable option. Each situation is unique, and evaluating health, policy terms, and family objectives with an attorney helps determine the best course of action to minimize unintended tax consequences while achieving the trust’s goals.
An ILIT can be drafted to provide for beneficiaries with special needs by directing distributions in ways that preserve eligibility for public benefits and address ongoing care needs. The trust language can specify that funds are used for supplemental needs rather than basic public benefits, and the trustee can be given discretion to make payments for medical needs, therapy, or other supports. Careful drafting is required to avoid disqualifying a beneficiary from means-tested programs while still providing meaningful support. Coordinating an ILIT with a dedicated special needs trust or other mechanisms may be advisable to ensure comprehensive protection and compliance with benefit rules. Working with counsel to draft compatible trust terms helps maximize the value of life insurance proceeds for beneficiaries with disabilities while preserving access to public programs when appropriate.
An ILIT complements an overall estate plan by working alongside a revocable living trust or a pour-over will to ensure life insurance proceeds are managed as intended. While a revocable trust offers flexibility during life, it may not provide the same estate tax treatment for life insurance proceeds as an ILIT. A pour-over will serves as a safety net to transfer remaining assets into a revocable trust at death, but life insurance that is owned by an ILIT bypasses probate and is distributed under the trust’s terms, helping streamline administration for beneficiaries. Coordination is essential to avoid conflicting beneficiary designations or duplicate directives. We review all related documents, including wills, powers of attorney, and health care directives, to ensure consistent instructions. Clear cross-referencing and alignment between instruments reduce confusion for trustees and guardians and help carry out your intentions smoothly after death.
If a trustee fails to pay premiums or otherwise mismanage the trust, the policy could lapse or the trust could lose intended protections, which may result in proceeds being included in the estate or diminished benefits for beneficiaries. Trustees have fiduciary duties to act prudently and in accordance with the trust’s terms, and beneficiaries may have remedies if a trustee breaches those duties. Selecting a trustee who understands responsibilities and providing clear instructions reduces the likelihood of such issues. When problems arise, options include removing and replacing the trustee if the trust permits or seeking court intervention to address mismanagement. Regular oversight, clear recordkeeping, and accessible communication between trustee, beneficiaries, and advisors help ensure trustees fulfill their duties and maintain the policy and trust assets for the benefit of intended recipients.
It is prudent to review your ILIT and related estate documents periodically, especially after major life events such as marriage, divorce, births, deaths, significant changes in assets, or changes in tax law. Regular reviews ensure that the trust remains properly funded, that premium strategies remain viable, and that beneficiary designations and trust instructions continue to reflect current wishes. A scheduled review, such as every few years, helps catch issues early and maintain alignment with family circumstances. During reviews we examine premium levels, confirm policy ownership and beneficiary designations, and assess whether trustee appointments remain appropriate. We also check that gift strategies for premium payments continue to support tax planning goals and that ancillary documents such as powers of attorney and health care directives remain up to date. Proactive maintenance helps preserve the intended benefits for beneficiaries and reduces the risk of administrative complications later.
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