An Irrevocable Life Insurance Trust (ILIT) can be a vital tool in estate planning for individuals who want to remove life insurance proceeds from their taxable estate while preserving access for beneficiaries. At the Law Offices of Robert P. Bergman, we help residents of Armona and the surrounding Kings County area evaluate whether an ILIT matches their financial and family goals. This guide explains how an ILIT functions, common uses, and the considerations that influence whether an ILIT is appropriate for your situation, including trust funding, trustee selection, and beneficiary designations.
Deciding to create an Irrevocable Life Insurance Trust involves a mix of financial, tax and family considerations. An ILIT is typically used to hold a life insurance policy outside of the insured’s estate, provide liquidity to pay estate expenses, and preserve legacy plans for heirs. This page outlines practical steps for setting up and funding an ILIT, clarifies how an ILIT interacts with other estate planning documents such as revocable living trusts and pour-over wills, and describes the ongoing administration responsibilities that trustees and beneficiaries should anticipate.
An Irrevocable Life Insurance Trust offers important benefits for estate preservation and family planning. By removing life insurance proceeds from the insured’s taxable estate, an ILIT can reduce potential estate tax exposure and ensure that proceeds pass to beneficiaries under the terms you establish. Beyond tax considerations, an ILIT can control distributions, protect proceeds from creditor claims in many situations, and provide a structured source of funds to cover estate administration costs or continuing family needs. When integrated with other estate documents, an ILIT can help implement clear, long-term intentions for legacy planning.
The Law Offices of Robert P. Bergman provides tailored estate planning services for individuals and families across California, including assistance with Irrevocable Life Insurance Trusts. Our approach focuses on understanding client goals, explaining legal options in straightforward terms, and drafting clear, durable documents that align with those goals. We work closely with trustees, financial advisors, and insurance professionals to coordinate trust funding and administration. Our priority is creating practical solutions that protect assets, reduce administrative burden for loved ones, and support long-term family plans in a changing legal and tax environment.
An Irrevocable Life Insurance Trust is a trust that owns one or more life insurance policies and is drafted so that the grantor cannot unilaterally revoke or control ownership after funding. The ILIT typically purchases or receives assignment of an existing policy and pays premiums from trust assets or gifts directed to the trust. When properly structured and maintained, the death benefit is paid to the trust and distributed to beneficiaries according to trust terms, potentially outside the estate for tax purposes. Proper timing, funding sources, and trustee selection are essential to achieve the intended estate planning results.
Establishing an ILIT requires careful coordination to avoid unintended tax consequences and to ensure that the trust remains effective. For example, gifts to the trust to pay premiums may need to satisfy gift tax rules and the trust must be administered to prevent estate inclusion issues. The trustee’s duties include premium payment, recordkeeping, and distributing proceeds in line with the trust instrument. Communication with insurance carriers and periodic reviews are also important to address policy changes, beneficiary circumstances, or modifications in financial goals over time.
An Irrevocable Life Insurance Trust is a legal arrangement in which the trust, rather than the insured individual, owns life insurance policies and is the beneficiary of the policy proceeds. Once the trust is properly created and a policy is transferred or issued in its name, the grantor generally gives up the ability to change ownership or policy terms. The trust document specifies how proceeds should be used or distributed, which may include income for surviving family members, payment of debts, or funding of other trusts. Because the trust owns the policy, proceeds typically pass according to trust provisions rather than through probate.
Setting up an ILIT involves drafting a clear trust agreement, selecting a reliable trustee, funding or assigning a life insurance policy to the trust, and managing gifts to cover premium obligations. The trust document should define distribution schedules, successor trustees, trustee powers, and provisions for handling policy changes or lapses. Additional steps often include coordinating with the insurer to change ownership and beneficiary designations, ensuring gift tax filings if necessary, and maintaining accurate records of premium gifts and trust expenses. Ongoing review ensures the ILIT continues to meet evolving legal and family needs.
Below are commonly used terms when discussing Irrevocable Life Insurance Trusts and related estate planning concepts. Understanding these terms helps clients make informed decisions about trust structure, funding strategies, and administration duties. Definitions clarify the roles of grantor, trustee and beneficiaries, explain how policy ownership versus beneficiary designation affects estate inclusion, and highlight relevant tax concepts such as gift tax and estate tax treatment. Being familiar with these terms supports more productive conversations with legal and financial advisors during the planning process.
The grantor is the person who creates the trust and transfers assets or directs gifts to the trust. In the context of an ILIT, the grantor typically establishes the trust for the purpose of removing life insurance proceeds from their taxable estate and directing how the proceeds will be managed and distributed after their passing. The grantor’s actions during the trust formation and funding phases can affect tax treatment, so it is important to follow documented procedures for transfers, premium payments, and trustee responsibilities to maintain the intended benefits of the ILIT.
A trustee manages the trust according to its terms and applicable law, which for an ILIT includes paying premiums, keeping accurate records, communicating with beneficiaries, and distributing proceeds as directed by the trust instrument. Trustees must act prudently and impartially, balancing the needs of different beneficiaries and preserving trust assets. Trustees should also handle tax filings and coordinate with insurance carriers to maintain policy status. Careful selection of a trustee who understands fiduciary obligations and practical administration tasks is an important part of ILIT planning and long-term success.
Irrevocable ownership means that after the grantor transfers the policy into the trust, the grantor no longer retains the power to change ownership or reclaim the policy. This loss of control is what generally enables the policy proceeds to be excluded from the grantor’s estate for tax purposes, provided the transfer is completed outside the relevant lookback periods and all other formalities are met. Irrevocable ownership also places responsibility for policy maintenance and premium payments on the trustee and funding sources identified in the trust document.
Crummey powers permit beneficiaries to withdraw certain gifts to the trust for a limited time, enabling contributions for premium payments to be treated as present interest gifts eligible for the annual gift tax exclusion. Properly implemented Crummey notices and procedures help preserve favorable tax treatment for premium gifts. At the same time, parties must monitor gift tax rules, filing requirements, and other tax considerations that may apply when making contributions to an ILIT. Compliance with these rules is important to maintain the intended tax and estate planning outcomes.
When evaluating an ILIT, it is helpful to compare it with other estate planning tools such as revocable living trusts, pour-over wills, and beneficiary designations on policies. A revocable trust offers flexibility during the grantor’s lifetime but does not remove assets from the taxable estate while the grantor retains control. Beneficiary designations are simple but may lack control features and creditor protections. An ILIT adds structure and potential tax advantages for life insurance proceeds but requires relinquishing control and committing to administration procedures. The right choice depends on family dynamics, tax exposure, liquidity needs, and long-term goals.
A more limited approach may be suitable when projected estate values fall well below federal and state estate tax thresholds and when the primary goal is straightforward beneficiary assignment rather than tax minimization. In such cases, keeping a life insurance policy with beneficiary designations or including it in a revocable trust might provide adequate protection and simpler administration. The decision should consider the size and liquidity of the estate, the age and needs of beneficiaries, and whether creditor protection or controlled distributions are necessary in the future.
If flexibility is the dominant priority because family circumstances or financial plans may change, a revocable trust or direct beneficiary designation can provide the ability to revise arrangements without the permanence of an ILIT. These options allow the grantor to adapt plans as life events arise, such as remarriage, changing health, or new financial goals. While flexibility reduces permanence and potential tax advantages, it can simplify management and let the grantor respond to evolving needs and preferences without the constraints of an irrevocable structure.
A comprehensive legal approach ensures coordinated handling of tax implications, insurance policy transfers, and trust administration duties. Because ILITs intersect with multiple legal and financial areas, engaging in careful planning prevents mistakes that could result in estate inclusion or unintended tax liabilities. Comprehensive planning includes drafting precise trust language, detailing funding methods, preparing gift documentation, and establishing trustee responsibilities. Working through these interconnected elements reduces the risk of administrative errors and supports consistent implementation of the grantor’s intentions for beneficiaries and legacy goals.
Comprehensive legal planning clarifies how proceeds will be used, who will manage the trust, and what procedures trustees should follow in different circumstances. Clear provisions can prevent disputes among beneficiaries and ensure funds are available to meet obligations such as estate administration costs or support for minor children or dependents. Drafting robust distribution rules and naming successors can also ensure continuity in trust management. Taking a thorough approach promotes efficient, predictable administration that aligns with the grantor’s long-term family and financial objectives.
A comprehensive approach to ILIT planning reduces uncertainty and helps protect the value of intended bequests. Thorough planning addresses funding methods, trustee powers, distribution standards, and contingencies that might arise during the life of the trust. This attention to detail helps ensure that policy ownership transfers and premium gifts are completed properly, preserving the trust’s desired tax and administrative outcomes. Comprehensive planning also creates a clear roadmap for trustees to follow, which can minimize family conflict and administrative delays after the grantor’s death.
Taking the time to coordinate an ILIT with other estate planning documents provides a cohesive framework for asset management and legacy goals. This coordination can include linking the ILIT to a pour-over will, revocable living trust, or other trusts intended to receive life insurance proceeds. Addressing these connections in advance reduces the need for corrective measures later and supports smoother transitions in wealth transfer. Ultimately, a comprehensive plan balances tax planning, control of distributions, and practical administration for the benefit of the grantor and intended beneficiaries.
One significant benefit of a well-structured ILIT is preserving the value of life insurance proceeds for beneficiaries by reducing potential estate tax exposure. Proper ownership and funding mechanics can remove the death benefit from the taxable estate, allowing more of the policy’s value to be distributed under the grantor’s chosen terms. In addition to tax considerations, the trust can provide creditor protection in many circumstances and shape how and when beneficiaries receive funds, which helps preserve wealth across generations according to the grantor’s intentions.
An ILIT lets the grantor set specific distribution standards, such as staged disbursements, education funding, or support for dependents, while a trustee manages the assets. This level of control ensures proceeds are used to meet long-term family or legacy goals rather than being subject to immediate claims or probate processes. With careful drafting, the trust can respond to changing circumstances and protect beneficiary interests by providing instructions and contingency plans that guide the trustee’s decisions and preserve the grantor’s intentions over time.
Maintaining accurate records of gifts made to the trust for premium payments and the Crummey notices sent to beneficiaries is essential for demonstrating compliance with gift tax rules and trust terms. Detailed documentation helps trustees account for contributions, supports transparency with beneficiaries, and simplifies annual or other tax reporting. Establishing a consistent process for documenting transfers, premium payments, and communications with the insurance carrier reduces the risk of administrative oversights and strengthens the legal position of the trust when questions arise.
Periodic review of the trust, policy terms, and beneficiary circumstances is important to ensure the ILIT continues to reflect current intentions and financial realities. Life events such as births, deaths, marriages, or changes in health and financial status can affect how a trust should operate. Regular reviews allow for administrative updates like naming successor trustees, addressing policy changes, and ensuring premium funding strategies remain viable. These reviews provide confidence that the ILIT will function as planned when it matters most.
Consider an ILIT when you want to separate life insurance proceeds from your taxable estate to potentially reduce estate taxes and provide structured support for beneficiaries. An ILIT is also useful when you want to ensure that proceeds are distributed according to specific terms rather than passing by beneficiary designation alone. Families with liquidity needs at death, such as funds needed for estate administration, debt repayment, or business succession, often find an ILIT helpful because it can provide designated funds without subjecting the proceeds to probate.
An ILIT may also serve families concerned about protecting proceeds from creditor claims, ensuring support for minor children or dependents, or preserving assets across generations according to carefully drafted distribution provisions. The irreversible nature of the trust requires planning and commitment, so it is most appropriate when grantors are ready to assign ownership and accept trustee administration. Discussing goals, potential tax benefits, and administrative responsibilities helps determine whether an ILIT aligns with your legacy objectives and family financial plan.
Individuals often consider an ILIT when they have substantial life insurance policies intended to benefit heirs, when estate liquidity is a concern, or when there is a desire to control distribution timing. Business owners frequently use ILITs as part of succession planning to provide buy-sell liquidity without adding to the owner’s taxable estate. Those with blended families may use ILITs to ensure specific shares pass to children from a prior relationship, while others rely on ILITs to protect funds for beneficiaries with special financial circumstances or creditor exposure.
When life insurance policies have significant face values relative to the rest of an estate, placing them in an ILIT can help prevent the proceeds from increasing estate tax exposure. Removing the policy from ownership by the insured and placing it into an irrevocable trust can preserve more value for beneficiaries, particularly in situations where liquidity is needed for estate settlement costs. Careful timing and correct transfers are essential to ensure that the intended tax advantages are maintained and that the trust functions as planned.
Business owners who need to provide liquidity for buy-sell agreements or to cover estate settlement costs often use ILITs to make funds available to heirs or key parties without subjecting proceeds to probate. An ILIT can hold the insurance that supports business succession arrangements, helping to stabilize ownership transitions and allowing beneficiaries to meet financial obligations tied to the business. Coordinating the ILIT with business documents and succession plans ensures proceeds are aligned with broader enterprise arrangements.
Families that want to control how life insurance proceeds are distributed, shield benefits from certain creditor claims, or provide for long-term needs of children or dependents frequently choose ILITs. The trust structure allows the grantor to define distribution timing and conditions, such as staged inheritances or spending for education and health care. This control can be particularly valuable for beneficiaries who may need oversight or support over time, or when a grantor wants to establish protections that endure beyond immediate probate and distribution processes.
The Law Offices of Robert P. Bergman assists Armona residents with Irrevocable Life Insurance Trust planning, implementation, and administration. We help clients evaluate whether an ILIT aligns with their estate and family goals, prepare trust documents, coordinate ownership changes with insurers, and advise trustees on their duties. Our approach emphasizes clear communication and practical solutions tailored to local clients, ensuring that the trust is integrated with other estate planning documents such as revocable living trusts and pour-over wills to create a cohesive plan that meets both short-term and long-term objectives.
Choosing a legal firm for ILIT matters means selecting a provider who will listen to your goals, explain legal considerations clearly, and coordinate with insurance and financial professionals to implement the plan. At the Law Offices of Robert P. Bergman, we focus on practical solutions that reflect client priorities and family dynamics. We prepare durable trust documents, guide the trust funding process, and assist trustees with administrative responsibilities to help ensure the ILIT functions as intended when benefits become payable.
Our firm emphasizes personalized service and attention to detail, which are important when establishing irrevocable arrangements that have long-term consequences. We help clients navigate gift tax implications, Crummey notice requirements, and communication with insurers to transfer ownership and preserve intended results. Clear drafting and careful coordination reduce the likelihood of administrative missteps and support efficient administration at the time of passing, providing greater certainty and stability for beneficiaries who rely on the trust structure.
We also assist with reviews and updates as circumstances change over time, helping clients maintain alignment between their ILIT and broader estate plans. From coordinating pour-over wills and revocable trusts to advising trustees on distribution mechanics, our role is to provide structured, practical guidance that helps clients achieve confidence in their long-term arrangements. For Armona and Kings County residents, this local focus means documents and recommendations that consider California law and regional considerations.
Our ILIT process begins with an in-depth conversation to understand your goals, family situation, and the role life insurance plays in your estate plan. We assess existing policies, discuss funding mechanisms for premiums, and review potential tax and administrative implications. Next, we draft tailored trust documents that reflect your distribution wishes and trustee instructions. After execution, we coordinate transfers or policy issuances with insurers and provide guidance for trustees to maintain trust compliance. Periodic reviews help ensure the ILIT continues to serve its intended purpose over time.
The first step is a confidential consultation where we gather information about your assets, life insurance policies, family dynamics, and estate objectives. During this stage we identify whether an ILIT is suitable, explain potential tax and administrative implications, and consider how the trust fits with other estate documents. This planning phase allows us to recommend funding strategies, trustee selection, and distribution structures that align with your goals and to provide an implementation timeline for drafting documents and coordinating with insurance providers.
We review existing insurance policies, beneficiary designations, and current estate planning documents to determine how an ILIT would integrate with your plan. This review helps identify policies to transfer, premium funding needs, and any actions required with insurers to change ownership. Understanding your full financial picture allows us to recommend whether to transfer an existing policy or to have the ILIT purchase a new policy, and to develop the trust language needed to achieve your objectives while addressing potential tax and administrative considerations.
During plan design we draft trust provisions that specify distribution timing, trustee powers, Crummey notice procedures, and contingencies for policy changes or trustee succession. We also outline a funding strategy for premium payments, which may involve annual gifts to the trust, use of other trust assets, or coordination with financial advisors. Clear funding instructions and notice procedures are essential to preserve favorable gift tax treatment and to maintain the trust’s intended estate planning benefits.
Once the plan design is agreed upon, we prepare the ILIT document and related forms needed for policy ownership transfer or issuance. Execution typically includes signing the trust, completing transfer or assignment paperwork with the insurer, and preparing any necessary gift tax documentation. We guide clients and trustees through each administrative step, ensuring that ownership records and beneficiary designations accurately reflect the trust’s role and that required notices and filings are completed in a timely manner.
Preparing the ILIT document involves carefully drafted provisions addressing trustee authority, distribution rules, Crummey notice requirements, successor trustee nominations, and interactions with other estate planning instruments. We tailor language to the client’s goals and to situations that may arise during trust administration. Clear, unambiguous provisions reduce the likelihood of disputes and provide trustees with a practical framework for managing policy premiums and distributions according to the grantor’s instructions.
Coordinating with insurance carriers is a critical phase to transfer ownership or issue a new policy in the name of the trust. Insurers require specific forms and documentation to change owner and beneficiary status, and failure to complete these requirements correctly can undermine the ILIT’s purpose. We assist with the required paperwork, follow up with carriers to confirm changes, and make sure that policies are correctly reflected as trust assets to preserve intended estate planning outcomes.
After the ILIT is established and policies are in the trust name, ongoing administration involves paying premiums, sending required notices, maintaining records, and preparing any needed tax filings. Trustees must be aware of duties and timelines, and beneficiaries should be kept informed according to the trust terms. Periodic reviews help confirm that funding remains adequate and that policy performance aligns with expectations. Our firm assists trustees with questions and provides guidance to help ensure the trust continues to operate as intended.
Premium funding requires a consistent process for making gifts to the trust or using trust assets to pay insurance premiums. Trustees should keep detailed records of contributions, premium payments, and notices provided to beneficiaries. Proper recordkeeping supports tax compliance, demonstrates adherence to the trust terms, and provides transparency to beneficiaries. These records are also important if questions arise about timing of gifts or the source of premium payments during the grantor’s lifetime or after their passing.
The trust should be reviewed periodically to address changes in policy performance, beneficiary circumstances, and legal developments. Trustees may need guidance about handling policy lapses, replacements, or distributions when benefits are payable. Regular check-ins with legal counsel help ensure that administration remains consistent with the trust terms and that any necessary documents or procedures are updated. Ongoing legal support reduces the likelihood of administrative missteps and helps trustees fulfill their fiduciary responsibilities effectively.
An Irrevocable Life Insurance Trust is a trust that owns life insurance policies and receives the death benefit, while a revocable trust remains under the control of the grantor and can be changed or revoked during the grantor’s lifetime. The key distinction is that an ILIT requires the grantor to relinquish ownership and certain controls over the policy, which is often necessary to achieve the objective of excluding the death benefit from the grantor’s taxable estate. This structural difference affects how proceeds are distributed and how the trust must be administered. When considering whether an ILIT or a revocable trust better suits your needs, evaluate priorities such as tax planning, control over distributions, and administrative flexibility. A revocable trust offers adaptability and may be enough when tax exposure is limited; an ILIT provides additional control over insurance proceeds and potential tax advantages but requires commitment to funding, trustee duties, and defined notice procedures. Discussing family goals and financial projections helps determine the most appropriate vehicle for your situation.
An ILIT can help reduce potential estate tax exposure by removing life insurance proceeds from the grantor’s taxable estate when ownership is transferred properly and other requirements are met. This benefit depends on factors including the size of the estate, current tax laws, and the timing of the transfer. Funding and transfer formalities, including the trust’s ownership documentation and any lookback periods, are important to preserve the intended tax outcomes and should be handled carefully. Because tax laws change and individual circumstances vary, it is important to review projected estate values and how an ILIT would interact with other estate planning strategies. Even in states without separate estate taxes, an ILIT can provide non-tax benefits such as controlled distributions, creditor protection in some contexts, and a clear mechanism for allocating life insurance proceeds to intended beneficiaries according to plan.
Funding an ILIT typically involves making gifts to the trust that the trustee uses to pay insurance premiums, or transferring an existing policy into the trust so the trust becomes both owner and beneficiary. The trust document will outline procedures for receiving gifts, providing Crummey notices to beneficiaries when appropriate, and instructing the trustee on premium payment. Regular funding and clear documentation of gifts help maintain favorable tax treatment and support trust administration. Because premium funding is ongoing, it is important to establish a reliable method for making contributions and to coordinate with financial advisors or other assets that may be used for premiums. Trustees should retain records of all gifts and payments, and clients should periodically reassess whether funding levels remain appropriate given policy performance, changes in premiums, or evolving family needs to ensure the trust continues to meet its intended objectives.
Yes, an existing policy can often be transferred into an ILIT, but there are timing and procedural considerations to avoid unintended tax consequences. Transfers within certain lookback periods prior to death may result in inclusion of the proceeds in the transferor’s estate, so proper timing and documentation are required. The insurer must complete ownership and beneficiary changes, and appropriate gift documentation and possible Crummey notices should be provided to beneficiaries when gifts are used to fund premiums. Before transferring a policy, review policy terms, potential gift tax implications, and whether replacement or new policies might be preferable. If a transfer is appropriate, completing the required forms with the insurer and maintaining a clear record of the transfer and any subsequent gifts ensures the ILIT functions as intended and helps avoid disputes or challenges regarding estate inclusion.
Selecting a trustee for an ILIT involves weighing administrative ability, impartiality, financial acumen, and trustworthiness. Trustees can be individuals such as family members or friends, or a professional fiduciary, and each option has different trade-offs related to cost, availability, and experience with trust administration. The trustee’s duties include paying premiums, maintaining records, issuing notices, and distributing proceeds according to the trust terms, so the chosen trustee should be willing and able to carry out these responsibilities. It is also important to name successor trustees and provide clear instructions in the trust document to handle contingencies over time. Good trustee selection and drafting help reduce the likelihood of disputes and ensure continuity in management. Discussing preferences with potential trustees in advance and documenting consent and expectations supports smooth administration when the time comes.
Crummey notices are communications sent to beneficiaries informing them of a present interest gift to the trust and their limited right to withdraw that gift for a brief period. These notices are used to qualify gifts made to the trust for the annual gift tax exclusion, which can help avoid gift tax liability on premium funding. Properly implemented notice procedures and reasonable withdrawal windows help preserve favorable tax treatment for contributions intended to pay insurance premiums. The mechanics of Crummey notices should be clearly described in the trust and supported by records showing that notices were delivered and whether any beneficiary exercised withdrawal rights. While withdrawals are rarely exercised in practice, providing accurate notices and documentation is a key administrative responsibility that supports the tax objectives of the ILIT and protects the grantor’s intended planning outcomes.
An ILIT typically functions alongside other estate planning documents such as a revocable living trust and a pour-over will. The ILIT specifically governs life insurance policies owned by the trust, while the revocable trust can manage other assets and coordinate distributions. A pour-over will can be used to move remaining assets into a revocable trust at death, creating an integrated plan. Ensuring consistent beneficiary designations and aligning distribution priorities across documents prevents conflicts and unintended outcomes. Coordination also involves naming trustees and successors consistently, clarifying how proceeds are to be used in relation to estate obligations, and confirming that documents reflect current intentions. Regular review of all estate documents ensures they work together harmoniously and reduces surprises or administrative complexity during the transition of assets to beneficiaries.
If the policy held in an ILIT lapses or is replaced, trustees should review the trust terms to determine available options and follow any specified procedures for handling policy changes. A lapse may reduce or eliminate intended benefits, so trustees should monitor premium payments and policy performance to prevent unintended loss of coverage. If replacement is necessary or desirable, coordination with the grantor’s advisors and a review of tax and funding implications are important to preserve the trust’s objectives. Trust provisions can address contingencies such as replacement policies or alternative funding sources, and trustees should keep beneficiaries informed of material changes. Where policies are replaced, documenting the reasons and confirming that transfers comply with trust terms and tax considerations helps maintain clarity and protect the trust’s intended outcomes for beneficiaries.
Whether beneficiaries can access funds immediately depends on the trust’s distribution provisions. Some ILITs are drafted to distribute proceeds outright to named beneficiaries upon receipt, while others specify staged payments, discretionary distributions, or uses limited to specific purposes such as education or support. The trustee must follow the trust instrument when making distributions, balancing any stated priorities and the needs of beneficiaries, and keeping thorough records of decisions and payments. When immediate access is limited, the trust can still provide timely liquidity for estate expenses or obligations while preserving the remainder for future needs. Clear drafting of distribution standards and trustee powers helps beneficiaries understand when and how funds will be made available, reducing uncertainty and potential disputes about distributions after the death of the insured.
An ILIT should be reviewed periodically, particularly after major life events such as births, deaths, marriages, divorces, changes in wealth, or alterations to insurance policies. Regular reviews help confirm that policy performance, premium funding, beneficiary circumstances, and trustee arrangements remain aligned with the grantor’s objectives. Updating contact information, successor trustee names, and administrative procedures can prevent problems and ensure continuity in the trust’s operation. The timing of reviews may vary depending on individual circumstances, but a scheduled check-in every few years or following significant changes provides a practical balance between proactive management and administrative efficiency. Regular communication with legal and financial advisors keeps the ILIT current and effective as part of an overall estate plan.
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