An irrevocable life insurance trust, or ILIT, can be a powerful estate planning tool for Riverdale residents who want to manage life insurance proceeds outside of their taxable estate. This guide explains how an ILIT works, who benefits from using one, and what steps are involved in establishing and maintaining the trust. Our firm helps clients in Fresno County evaluate whether an ILIT fits their broader estate plans, coordinate beneficiary designations, and ensure the trust terms reflect their wishes. We focus on clear communication about timing, trustee selection, funding procedures, and potential tax implications to help clients make informed decisions.
Setting up an ILIT involves more than signing documents; it requires thoughtful planning about the policy ownership transfer, ongoing trust administration, and coordination with other estate planning instruments such as wills, revocable trusts, and healthcare directives. In many cases, families benefit from reviewing their estate plan as a whole to avoid unintended consequences like estate tax exposure or probate for life insurance proceeds. We explain how trust terms, distribution timing, and trustee powers can be used to provide for beneficiaries, protect assets from creditors, and support long term goals like education, business succession, or care for a family member with special needs.
An ILIT serves distinct goals depending on family circumstances and financial structure. Placing a life insurance policy into an irrevocable trust can remove the policy death benefit from the insured’s estate for tax purposes, provide creditor protection for beneficiaries, and create controlled distributions according to a grantor’s intent. The trust can also designate contingent beneficiaries, set ages or milestones for distributions, and preserve benefits for family members with specific needs. When coordinated with other estate planning documents, an ILIT can reduce estate administration delays and ensure liquidity to pay estate costs, debts, or taxes without forcing the sale of principal assets.
Law Offices of Robert P. Bergman is dedicated to helping California residents address complex estate planning concerns with clear, practical guidance. Our attorneys work closely with clients to design trust structures, coordinate policy transfers, and draft trust provisions that reflect client priorities. From initial planning through document execution and trust administration, the firm emphasizes careful attention to legal formalities and communication with trustees, beneficiaries, and financial advisors. Clients in Riverdale and across Fresno County rely on our firm for steady counsel on trust funding, tax considerations, and integration with wills, powers of attorney, and healthcare directives.
An ILIT is a separate legal entity created to own a life insurance policy for the benefit of designated persons or entities named as beneficiaries. Creating an ILIT commonly involves drafting a trust agreement, naming a trustee, and transferring ownership of an existing policy or directing the trust to purchase a new policy. Because the trust is irrevocable, the grantor typically relinquishes certain rights over the policy, which can provide estate tax benefits but also requires careful planning to ensure the grantor and trustees comply with transfer timing rules and gift tax considerations. Ongoing administration includes managing premium payments and recordkeeping.
When evaluating an ILIT, it is important to consider how the trust will be funded, who will serve as trustee, and what distribution standards will guide payouts to beneficiaries. Trustees may be family members, trusted friends, or a corporate trustee, and their responsibilities include making premium payments, communicating with beneficiaries, and following the trust terms at the time of the insured’s death. An ILIT can work in tandem with other documents such as pour-over wills and powers of attorney to provide a comprehensive plan that addresses both asset management and health care decisions during life, and asset distribution after death.
An ILIT is a trust created to hold a life insurance policy outside of an individual’s estate. The trust is typically set up so that the policy is owned by the trust rather than the insured individual, which can remove the death benefit from the insured’s taxable estate if done properly. Key elements include the trust agreement, named trustee, beneficiaries, and instructions for premium payments. The trust document may also include provisions for how proceeds will be used, such as paying debts, funding education, or providing long term distributions to beneficiaries under controlled conditions to meet family goals.
Creating and maintaining an ILIT involves a sequence of steps and ongoing administrative duties. Initial tasks include drafting the trust document, selecting a trustee, and transferring ownership of an existing insurance policy or directing the trust to purchase a new policy. After funding, the grantor must ensure the trust has the means to pay premiums, often through annual gifts to the trust. Trustees are responsible for maintaining records, communicating with beneficiaries, and executing the trust terms upon the insured’s death. Properly following these processes is essential to achieve the anticipated tax and protective benefits of the trust.
This glossary explains commonly used terms when discussing ILITs and estate planning. Understanding terms such as grantor, trustee, beneficiary, transfer for value, gift tax, and taxable estate helps clients make informed decisions. Clear definitions give context to how trust provisions affect distribution timing, beneficiary protections, and tax treatment. Familiarity with these terms also helps when coordinating the ILIT with other documents like revocable living trusts, wills, powers of attorney, and healthcare directives. A clear grasp of terminology supports better conversations with trustees, financial advisors, and family members.
The grantor is the person who creates the ILIT and transfers the life insurance policy into the trust. As the grantor, this individual typically provides the initial directions for how the trust should operate, names the trustee and beneficiaries, and may make gifts to the trust to cover policy premiums. Once the trust is irrevocable, the grantor generally gives up direct control over trust assets, meaning that decision making about policy ownership and distributions is governed by the trust document and carried out by the trustee. Clear drafting is important to reflect the grantor’s long term intentions.
The trustee is the person or institution responsible for administering the ILIT according to its terms. Trustees manage the trust property, make premium payments when funds are available, keep accurate records, and distribute policy proceeds to beneficiaries after the insured’s death. Trustees also communicate with beneficiaries about trust conditions and handle any tax or administrative filings required by law. Selection of a trustee should consider reliability, willingness to serve, and an understanding of fiduciary duties, since trustees have legal obligations to act in beneficiaries’ best interests within the constraints of the trust document.
A beneficiary is a person or entity designated to receive benefits from the ILIT, typically the death proceeds of the life insurance policy held by the trust. Beneficiaries can be named outright, receive proceeds in stages, or be given distributions based on specific events or needs set out in the trust document. Trust provisions can protect beneficiaries from creditors, control the timing of payments for younger heirs, or allocate funds for particular purposes such as education or long term care. Proper beneficiary designations and contingent beneficiaries help avoid unintended results.
Transferring a life insurance policy into an ILIT requires attention to rules that can cause the death benefit to be included in the insured’s estate. If the transfer occurs too close to the insured’s death, a three-year lookback rule may apply, potentially causing estate inclusion. Additionally, transfers for value can create tax consequences under certain circumstances. Careful planning and timing are essential to maximize the desired benefits, and trustees and grantors should follow IRS and state guidance to avoid unintended estate tax exposure or other adverse results.
An ILIT can be contrasted with approaches such as keeping a policy in the insured’s name, using a revocable trust, or making beneficiary designations directly on the policy. Each option has advantages and tradeoffs involving control, flexibility, liquidity, and tax exposure. For example, retaining a policy in one s name provides more direct control but can expose the death proceeds to estate taxation, while an ILIT reduces estate inclusion but requires relinquishing certain rights. Choosing between strategies depends on individual goals, asset mix, projected estate tax exposure, and the need for creditor protection for beneficiaries.
A limited approach to life insurance ownership may be appropriate for families whose total estates are well below estate tax thresholds and who prioritize simplicity. In such situations, maintaining a policy in the insured’s name or using straightforward beneficiary designations can reduce administrative complexity and cost. The decision should account for the family’s need for liquidity at death and the potential for future growth of assets. Periodic review of the overall estate plan helps ensure that the chosen arrangement remains aligned with changing circumstances, such as shifts in asset values or family composition.
When a life insurance policy has relatively small value or serves a short term purpose, the costs and administrative requirements of an ILIT may outweigh the benefits. For temporary coverage needs, such as short term debt protection or small-scale family expenses, simpler ownership and beneficiary structures can be more efficient. In these cases, families often rely on clear beneficiary designations and ensure that the policy coordinates with their wills or revocable trusts so that proceeds pass in the manner intended without additional trust administration.
For households with sizable assets, business interests, or complicated family dynamics, a comprehensive approach that includes an ILIT can help manage estate tax exposure, succession planning, and creditor protection. Comprehensive planning coordinates multiple documents such as trusts, wills, powers of attorney, and healthcare directives to ensure each element supports the others. This integrated perspective reduces the risk of conflicting instructions and helps families create a roadmap for funding obligations, managing distributions, and providing for beneficiaries over time.
When beneficiaries include individuals with special needs, significant creditor exposure, or concerns about spendthrift protection, comprehensive planning can tailor trust language and distribution timing to serve those needs. An ILIT can be drafted to work with special needs trusts, guardianship nominations, or other protective arrangements, ensuring that life insurance proceeds do not inadvertently disqualify benefits or leave vulnerable beneficiaries without necessary supports. Careful coordination among documents reduces administrative burdens and supports long term financial security for those beneficiaries.
A comprehensive approach to estate planning helps ensure that life insurance planning, trust documents, beneficiary designations, and powers of attorney all work together toward consistent goals. This coordination minimizes gaps that can cause delays and unintended tax consequences. Comprehensive planning also enables proactive decisions about liquidity to cover taxes and expenses, targeted protections for beneficiaries, and clarity about successor decision makers. Families that review their plans comprehensively are more likely to achieve their intended distribution outcomes and reduce administrative complications for loved ones after death.
Additionally, coordinated planning can strengthen family communication and reduce disputes by documenting intentions and providing clear mechanisms for trustees to follow. When documents are drafted and organized together, trustees and family members have a roadmap for executing the grantor s wishes. The benefits include timely access to resources, professionally drafted provisions to address contingencies, and clearer tax planning results. This approach often includes practical steps like arranging trustee education, establishing funding mechanisms for premiums, and coordinating with financial advisors to implement investment and beneficiary strategies.
One of the primary benefits of using an ILIT within a broader estate plan is the potential reduction of estate tax exposure while providing liquidity to pay estate obligations. By holding a life insurance policy within an irrevocable trust, proceeds may pass to beneficiaries outside the insured s taxable estate, offering a source of cash for taxes, debts, and administration costs. This arrangement helps preserve other assets for heirs or business continuation, reducing pressure to sell property after death and improving the ability to carry out long term legacy goals.
An ILIT can provide structured distributions that protect beneficiaries from immediate lump sum exposure and from creditor claims in many circumstances. Trust provisions can delay distributions until beneficiaries reach certain ages, accomplish milestones, or meet other conditions set by the grantor. These controls can be particularly useful for younger heirs, beneficiaries with potential creditor issues, or those who require long term support. The trustee s role in administering distributions according to the trust terms helps ensure the grantor s intentions are followed and supports prudent stewardship of trust proceeds.
Timing matters when transferring a policy to an ILIT because certain rules can cause the death benefit to be included in the insured s estate if the transfer occurs too close to the date of death. Establishing the trust and completing ownership transfers well in advance helps avoid complications from lookback periods and transfer for value considerations. It is also helpful to document the transfer steps and confirm premium funding arrangements, so trustees have clear authority and resources to maintain the policy without interruption, which supports preservation of the anticipated benefits.
Selecting an appropriate trustee is a key decision because the trustee will manage the policy, make distributions, and carry out the trust terms after the insured s death. A trustee should be someone who can handle administrative duties, communicate effectively with beneficiaries, and adhere to the trust s distribution standards. For families that prefer continuity and impartial administration, a corporate or fiduciary trustee may be an option. Whatever choice is made, the trust should provide clear guidance on trustee powers, successor appointment, and compensation if applicable.
Families may consider an ILIT when protecting life insurance proceeds from estate taxes, securing liquidity for estate costs, or creating controlled distributions is a priority. An ILIT can help ensure that policy benefits are available to beneficiaries without undergoing probate and can provide protections against certain creditor claims. It also serves as a vehicle to ensure proceeds are used for specified purposes, such as education, business succession, or care for family members. These benefits are particularly relevant for households with larger estates or complex family dynamics that require intentional distribution planning.
Other reasons include the desire to coordinate life insurance with a broader trust-based plan, protect beneficiaries who might need long term financial management, and create a framework for successor decision making. An ILIT can be tailored to meet goals such as providing staged distributions, creating reserves for future expenses, or supporting charitable gifts. For couples and business owners, an ILIT can be combined with other strategies to preserve wealth, facilitate business continuity, or provide for a surviving spouse while managing tax implications in the most beneficial manner.
Typical circumstances include households with significant life insurance policies, estates approaching taxable thresholds, business owners seeking liquidity for succession, and families with beneficiaries who need long term financial oversight. An ILIT can also be appropriate when the grantor wants to prevent life insurance proceeds from increasing the size of their taxable estate or when there is a desire to control distribution timing. Additionally, when beneficiaries may be vulnerable to creditor claims, divorce, or mismanagement, the structured distribution powers of an ILIT can provide helpful safeguards.
When a life insurance policy represents a substantial portion of a family’s assets, placing the policy in an ILIT may help prevent the death proceeds from being included in the insured s estate and subject to estate taxes. The trust mechanism creates separation between the insured and the policy ownership, which can be an important component of a tax conscious plan. Evaluating potential estate tax exposure alongside other assets like real estate and retirement accounts helps determine whether an ILIT is an appropriate tool.
Business owners often use life insurance to fund buy-sell arrangements or provide liquidity to keep a business operational after an owner’s death. Holding a policy in an ILIT can ensure that funds are available to pay business debts or buy out an owner s interest without adding those proceeds to the owner s taxable estate. This structure supports orderly transitions by providing a dedicated source of cash while allowing the rest of the business assets to pass through existing succession plans and trust instruments.
Families with beneficiaries who have ongoing needs, addiction issues, or exposure to creditors may prefer trust based distribution structures to reduce risks associated with lump sum inheritances. An ILIT permits the grantor to direct how and when proceeds are distributed, and it can be integrated with other protective tools such as special needs trusts and spendthrift provisions. Thoughtful drafting helps ensure that beneficiaries retain eligibility for government benefits where appropriate and that funds are disbursed in a manner that supports long term wellbeing.
Our firm serves Riverdale and nearby communities in Fresno County by helping residents design and implement life insurance trusts and other estate planning documents. We assist with drafting trust instruments, coordinating policy transfers, naming trustees and beneficiaries, and outlining administration procedures to ensure continuity. We help clients balance goals like tax planning, asset protection, and beneficiary care, and we provide clear guidance on compliance steps. If you are considering an ILIT, we can meet with you to review your current insurance and estate plan and outline a tailored approach that fits your needs.
The Law Offices of Robert P. Bergman offers focused legal services for estate planning clients throughout California, including assistance with life insurance trusts, wills, powers of attorney, and related documents. We provide methodical planning, clear drafting, and attentive client communication to ensure that each trust is aligned with a client s objectives. Our approach includes careful discussion about trustee selection, funding methods for premiums, and the interactions between the ILIT and a client s broader estate plan to minimize unintended tax or administrative consequences.
Clients benefit from our practical orientation toward implementation, where we coordinate with financial advisors and insurance carriers to confirm policy ownership transfers and premium payment processes. We prepare the trust documents needed for proper administration, assist with gift documentation when necessary, and advise trustees on their responsibilities. Our goal is to simplify the steps required to achieve reliable outcomes and reduce stress for families during the planning process and at the time of administration.
We also emphasize regular reviews and updates as circumstances change, such as modifications in family composition, asset values, or relevant law. By maintaining an up to date estate plan, clients in Riverdale and Fresno County can rest more easily knowing that their life insurance and other assets are arranged to support their legacy intentions. We welcome conversations about how an ILIT might fit into your plan and offer practical recommendations to implement your goals.
Our process begins with an initial consultation to assess goals, review existing policies and estate documents, and identify potential timing or tax issues. From there we draft a trust instrument tailored to the client s wishes, assist with trustee selection, and coordinate the policy transfer or trust purchase. We prepare any necessary funding documentation and advise on annual gifting strategies to support premium payments. After the trust is established, we provide guidance to trustees on administration and remain available for follow up to address changes or questions that arise over time.
During the initial planning stage we gather information about existing life insurance policies, beneficiaries, financial accounts, and family objectives. We discuss how an ILIT would fit into the overall estate plan, explain timing considerations such as lookback rules, and identify trustee candidates. Following this information gathering, we prepare a customized trust agreement that sets out trustee powers, distribution standards, and instructions for premium funding. Clear drafting at this stage reduces the likelihood of disputes and ensures the trust operates as intended when activated.
We draft the ILIT document to reflect the grantor s goals, naming trustees, successor trustees, and beneficiaries while including provisions for distributions, tax handling, and trustee duties. The trust also contains instructions for how annual gifts should be handled, how premium payments will be made, and any powers the trustee may need to manage the policy. We prepare a clear set of trustee instructions and a trust funding checklist to guide the transfer process and establish expectations for recordkeeping and communication.
Working with insurance carriers and financial advisors, we assist in transferring ownership of an existing policy to the ILIT or arranging for the trust to purchase a new policy. We recommend funding strategies to ensure premiums are paid, which may include annual gifts from the grantor or establishing a mechanism for ongoing contributions. Proper documentation of transfers and gifts is prepared to support the trust s intended treatment and to comply with relevant tax and insurance procedures during the funding transition.
After the trust is created and the policy funded, ongoing administration becomes important to preserve the trust s benefits. Trustees must maintain accurate records of premium payments, gifts, communications to beneficiaries, and any changes related to the policy. Regular reviews help confirm the policy remains in force and that funding arrangements are sufficient. Trustees may need guidance on filing any required tax forms and ensuring that distributions comply with the trust terms and relevant law, which helps protect the trust’s intended outcomes.
Trustees should conduct annual reviews to confirm premium payments are timely, investments linked to the trust are performing as expected, and beneficiary information is current. This routine oversight reduces the risk of policy lapse and helps trustees identify needed adjustments early. Consistent recordkeeping of gifts and premium disbursements is also important for compliance and for documenting the trust s history, should questions arise later about the administration or tax treatment of the trust and policy.
Trustees have a role in communicating with beneficiaries about the trust s general purpose, distribution standards, and anticipated timelines. Appropriate communication builds transparency and can reduce misunderstandings among family members after the insured s death. Trustees must balance confidentiality with the beneficiaries right to information under the trust and state law, so clear procedures for updates and requests for information should be established in the trust document or accompanying trustee instructions.
When the insured dies, the trustee must coordinate with the insurance company to claim the proceeds and then administer distributions in accordance with the trust terms. This process often involves obtaining certified death certificates, submitting claim forms, and following any creditor notice or tax filing requirements. The trustee disburses funds to beneficiaries as specified, handles any tax matters, and closes the trust when appropriate. Proper documentation throughout this process supports a smooth administration and reduces the risk of disputes.
To claim insurance proceeds, trustees gather required documentation such as death certificates and policy information and submit the claim to the carrier. The trustee must also verify beneficiary designations and trust terms to confirm how proceeds should be allocated. Timely and accurate claims processing ensures funds become available to address estate obligations and implement intended distributions. Trustees should follow the trust s directions and keep beneficiaries informed of progress while maintaining appropriate records of the claim and receipt of funds.
After receiving proceeds, the trustee executes distributions according to the trust document and prepares any necessary accounting for beneficiaries. If the trust includes ongoing provisions, the trustee manages investments and payments over time; if the trust is designed for final distribution, the trustee will wind up affairs and close the trust following applicable rules. Trustees should also consider any tax reporting obligations and consult with advisors when needed to ensure compliance and proper documentation during the final settlement process.
An irrevocable life insurance trust is a trust created to own a life insurance policy separately from the insured s estate. The trust holds the policy and names beneficiaries who will receive proceeds according to the trust terms. Because the trust is irrevocable, the grantor transfers ownership and generally gives up direct control over the policy, which may help prevent the death benefit from being included in the grantor s taxable estate when transfers are properly timed. Establishing an ILIT often involves careful planning to ensure the trust fits within a broader estate plan. People use ILITs to achieve several goals, such as providing liquidity to cover estate obligations, protecting proceeds from certain creditor claims, and setting structured distribution terms for beneficiaries. The process typically requires drafting a trust document, selecting a trustee, transferring policy ownership or directing the trust to acquire a new policy, and arranging premium funding. Because the trust is irrevocable, it is important to consider the long term implications and coordinate with other estate planning documents before moving forward.
Transferring a policy to an ILIT can remove the death benefit from the insured s estate for estate tax purposes, provided the transfer is completed outside any lookback period that might cause inclusion. A three year lookback rule under federal law can cause the proceeds to remain includable if the insured dies within three years of the transfer, so timing is an important consideration. Proper planning and documentation help maximize the tax benefit and minimize the risk of unintended estate inclusion. It is also important to consider gift tax issues when transferring an existing policy or making annual gifts to the trust to fund premiums. Depending on the funding method, gift tax returns may be required. Coordinating with tax advisors and maintaining clear records of gifts and premium payments can ensure compliance and support the intended tax treatment of the ILIT and related transactions.
A trustee should be someone trusted to manage administrative duties, maintain accurate records, and follow the trust terms in communicating with beneficiaries. Many grantors choose a family member or close friend who is organized and reliable, while others select a corporate or professional fiduciary for impartial administration and continuity. The trustee s duties include paying premiums when funds are available, making distributions according to the trust, and filing any required tax forms or accounting for beneficiaries. When choosing a trustee, consider the complexity of the trust, potential conflicts among beneficiaries, and the trustee s ability to handle ongoing responsibilities. Successor trustees should also be named in the trust to ensure continuity in case the initial trustee is unable to serve. Clear instructions in the trust document about trustee powers, compensation, and reporting requirements can reduce ambiguity and support smooth administration over time.
Transferring an existing policy typically involves drafting the ILIT, completing the insurance carrier s forms to change ownership to the trust, and confirming beneficiary designations align with the trust terms. It is important to document the transfer carefully and coordinate with the carrier to ensure the transfer is accepted and the policy remains in force. The timing of the transfer should be considered in light of any lookback rules that may affect estate inclusion. After transfer, the grantor may need to provide gifts to the trust to cover premium payments, and such gifts should be documented. Working with counsel and the insurance carrier helps prevent lapses, confirms that premium payment arrangements are practical, and ensures that any necessary tax reporting is completed. Trustees should maintain records of the transfer and any subsequent gifts or premium payments.
Premium payments for a policy held in an ILIT are typically made by the trust when the trustee has available funds. Many grantors make annual gifts to the trust that the trustee then uses to pay premiums. Gift tax rules can come into play with these annual contributions, and it is important to understand whether gifts qualify for any exclusions and whether gift tax returns must be filed. Trustees must maintain clear records of gifts received and premiums paid, and they should communicate with the grantor s family or financial advisors to ensure ongoing funding is reliable. In some cases, other funding arrangements may be put in place, but whatever method is chosen should be documented in the trust and coordinated with both the insurance carrier and any financial advisors to prevent policy lapse and preserve the trust s benefits.
Because an ILIT is irrevocable, making changes to the trust itself is generally limited, and grantors do not retain the same degree of control they would have with revocable instruments. Modifications may be possible in narrow circumstances such as addressing clerical errors, using decanting provisions if allowed, or obtaining consent from beneficiaries or court approval depending on state law and the trust s terms. It is important to draft the trust carefully from the outset to reflect durable intentions. While the trust document may be difficult to change, surrounding documents and arrangements can sometimes be adjusted to achieve updated objectives, such as purchasing additional policies, changing funding strategies, or updating related estate planning documents. Regular reviews of the overall plan help identify where modifications may be needed and whether alternative planning steps should be taken to adapt to changed circumstances.
If a policy lapses after transfer to an ILIT, the trust would lose the anticipated death benefit unless alternative funding or replacement policies are in place. Lapses can occur if premium payments are not made or if funding mechanisms fail. Trustees should monitor premium schedules and maintain accurate records to prevent lapses. If a lapse occurs, the trustee should review options such as reinstatement, replacement, or alternative funding strategies, depending on policy terms and the preferences of the beneficiaries. Prevention is the best approach, so establishing reliable premium funding methods and conducting regular reviews are essential. Communication among trustees, beneficiaries, and the grantor s advisors can help identify potential shortfalls early and allow for corrective steps to keep the policy in force or arrange suitable alternatives that preserve intended protections for beneficiaries.
An ILIT typically becomes the owner and primary beneficiary of a policy, and the trust document then directs distributions to named beneficiaries. It is important to ensure that beneficiary designations and the trust terms are coordinated so that the policy proceeds are directed and handled as intended. Any inconsistencies between the policy paperwork and the trust document can create administrative confusion, so confirming alignment with the insurance carrier is a key step during the transfer process. Contingent beneficiaries should also be addressed to ensure there is a clear succession of how proceeds will be distributed if primary beneficiaries are unavailable. Trustees should keep beneficiary records up to date and consult the trust document when questions arise, maintaining transparency with beneficiaries about the trust s general purpose while protecting confidential details as appropriate under the trust terms and state law.
Whether beneficiaries receive proceeds immediately depends on the trust s distribution provisions. Some ILITs are structured to distribute proceeds promptly to designated beneficiaries, while others hold funds for a period, make staged distributions, or provide for payments based on conditions such as age or specific needs. The trust document determines timing and methods of distribution, so clarity in drafting ensures that trustees can act according to the grantor s intentions without unnecessary delay. Trustees must follow the trust s instructions when distributing proceeds and should provide appropriate accounting to beneficiaries. If the trust requires ongoing management of funds, trustees will handle investments and payments over time. Beneficiaries will typically be informed about the general timeline and any conditions that affect distribution, but exact timing can vary depending on how the trust was structured and the specific terms included by the grantor.
It is advisable to review an ILIT and the broader estate plan periodically, such as every few years or when significant life events occur. Changes in family circumstances, asset values, tax law, or goals can affect whether the ILIT continues to achieve intended objectives. Regular reviews allow clients to confirm that funding strategies remain effective, trustee selections are still appropriate, and related documents such as wills and powers of attorney are aligned with the trust arrangement. Whenever changes occur—marriage, divorce, births, deaths, major financial transactions, or changes in business ownership—a review is warranted to assess whether updates or alternative planning steps are needed. Keeping documents current and coordinated helps avoid gaps and ensures the ILIT continues to serve long term objectives in concert with the rest of the estate plan.
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