An irrevocable life insurance trust (ILIT) can be a powerful component of an estate plan for those seeking to remove life insurance proceeds from an estate while providing liquidity to heirs. An ILIT holds a life insurance policy outside of the grantor’s taxable estate, which may help reduce estate tax exposure and simplify administration after passing. Setting up and funding an ILIT requires careful attention to trust language, timing of premium gifts, and trustee selection to ensure the trust achieves its intended goals and complies with federal tax rules and applicable state considerations.
Many clients consider an ILIT when they want to preserve more of their estate for beneficiaries, provide for final expenses, or protect proceeds from estate administration delays. An ILIT is often coordinated with other estate planning documents, such as a revocable living trust, pour-over will, powers of attorney, and health care directives. Thoughtful planning ensures that insurance proceeds are distributed according to the grantor’s wishes and used to support family members, business succession, or charitable goals while reducing potential tax liabilities and administrative burdens.
An ILIT provides benefits beyond the immediate insurance payout. By holding the policy in trust, proceeds can pass outside of probate, provide liquidity to pay taxes and debts, and support orderly transfer of assets to beneficiaries. An ILIT can also preserve family privacy and allow the grantor to specify how proceeds are used and when distributions occur. For individuals with sizable estates, the structure of an ILIT can reduce estate tax exposure. Additionally, the trustee’s control over timing and form of distributions can help protect proceeds from creditors or from being spent irresponsibly by beneficiaries.
The Law Offices of Robert P. Bergman provides personalized estate planning services tailored to each client’s family circumstances, financial goals, and concerns about asset preservation. With a focus on clear communication and practical solutions, our team assists clients from initial planning through document preparation and trust funding. We prioritize listening to client objectives and explaining options in straightforward terms, helping people understand the implications of an ILIT and how it coordinates with wills, living trusts, powers of attorney, and healthcare directives to create a cohesive plan that reflects individual priorities.
An ILIT is a separate legal entity created to own life insurance policies and receive policy proceeds when the insured dies. The grantor transfers ownership of an existing policy into the trust or has the trust acquire a new policy and funds premium payments through gifts to the trust. Because the trust irrevocably owns the policy, the death benefit generally is not included in the grantor’s probate estate, which can reduce estate taxes and streamline asset distribution. Proper drafting and funding are essential to ensure the trust meets legal and tax requirements and functions as intended for beneficiaries.
Key considerations include who will serve as trustee, how gifts to pay premiums will be structured, and whether the trust will contain provisions for distribution timing and conditions. The trustee handles policy administration, premium payments, and claims administration at the insured’s death. Grantors should be mindful of gift tax implications from funding premium payments and potential three-year inclusion rules that may apply if the policy is transferred close to the date of death. Careful planning helps avoid unintended tax consequences and ensures the trust’s purpose is fulfilled.
An irrevocable life insurance trust is a trust that, once established and funded, generally cannot be altered by the grantor and is designed to own life insurance policies. The trust becomes the policy owner and beneficiary, ensuring that proceeds bypass probate and are distributed according to trust terms. This structure provides a way to manage and direct life insurance proceeds for the benefit of heirs, pay estate taxes and final expenses, and maintain privacy. The irrevocable nature ensures the policy’s proceeds are separate from the grantor’s estate, subject to applicable tax rules and timing considerations.
Creating an ILIT involves drafting trustee powers and beneficiary designations, transferring ownership of an existing policy or purchasing a new policy through the trust, and arranging gifts to the trust for premium payments. The trustee administers the policy, accepts gifts, manages trust assets, and distributes proceeds according to the trust’s instructions. Important processes include ensuring that premium gifts qualify for the annual gift tax exclusion when applicable, maintaining accurate documentation for gifts, and taking care with transfers near the end of life to avoid the three-year inclusion rule. A properly funded ILIT operates as a dedicated vehicle for life insurance proceeds.
Understanding common terms helps clients make informed decisions about an ILIT. Terms such as grantor, trustee, beneficiary, premium gifts, annual exclusion, and three-year rule describe the parties and tax concepts relevant to trust setup and funding. Familiarity with these definitions aids in communicating intentions, timing gifts correctly, and ensuring the trust’s language aligns with goals. A clear grasp of these words also helps when coordinating the ILIT with other estate planning documents like revocable trusts and wills so all parts of an estate plan work together coherently.
The grantor is the person who creates the trust and transfers the insurance policy or provides gifts to the trust for premium payments. In ILIT planning, the grantor initiates the trust to hold life insurance for beneficiaries and often continues to pay premiums by making gifts to the trust. The grantor’s role is central to setting trust objectives and selecting trustees and beneficiaries. While the grantor can generally set terms at creation, the trust’s irrevocable nature limits later changes, so the grantor should carefully consider the trust language and long-term goals before establishing the ILIT.
The trustee manages the trust according to its terms, handling premium payments, record keeping, and distribution of proceeds when the insured passes away. The trustee must act in the beneficiaries’ best interests and follow the trust’s instructions with respect to distribution timing and amounts. Selecting a trustee who is willing to administer a trust, maintain financial records, and file any necessary tax returns is essential. Trustees can be individuals or institutions, and their responsibilities include communicating with beneficiaries and ensuring that the trust remains compliant with applicable tax and trust laws.
A beneficiary is a person or entity named in the trust to receive insurance proceeds or other trust assets according to the trust’s terms. Beneficiaries can be family members, charities, or other entities, and the grantor can specify distribution conditions or timing to address particular needs. For example, a trust may instruct that proceeds be used for education, living expenses, or long-term support, and may stagger distributions to protect assets from creditors or to guide younger beneficiaries. Clear beneficiary designations help the trustee implement the grantor’s intentions effectively.
The three-year rule refers to IRS regulations that can include life insurance proceeds in the grantor’s estate if the grantor transferred an existing policy to a trust and died within three years of the transfer. This rule prevents recent transfers from removing significant assets from the estate for tax purposes. To avoid this, many clients either purchase a new policy owned by the ILIT or transfer policies well before the three-year window. Understanding this rule is important when timing transfers or purchases to ensure the trust achieves the intended estate tax benefits.
Clients often compare an ILIT with leaving life insurance directly to beneficiaries, using a revocable trust ownership, or relying on payable-on-death designations. Each option has different implications for probate, control, creditor protection, and estate tax exposure. An ILIT typically offers more control over distributions and potential estate tax benefits, while ownership outside a trust may be simpler but can increase estate inclusion and probate involvement. Evaluating these options requires considering family circumstances, tax considerations, timing, and preferences for privacy and asset protection.
For individuals with estates well below federal and state estate tax thresholds, the administrative complexity and costs of an ILIT may outweigh the potential benefits. In such cases, simpler arrangements like naming beneficiaries on the policy or using a revocable trust can provide a straightforward transfer of proceeds without the need for a separate irrevocable structure. The decision depends on financial circumstances, family needs, and comfort with potential creditor exposure. Reviewing current estate values and projected changes can help determine whether a limited approach meets goals without extra layers of administration.
If the primary objective is simply to provide liquidity for final expenses and immediate needs rather than long-term asset protection or tax planning, having a policy designated directly to beneficiaries or keeping a policy in a revocable trust can accomplish that goal with less complexity. Those arrangements allow proceeds to be available quickly while avoiding the setup and maintenance of a separate irrevocable trust. Selecting a simple option may be appropriate when long-term control or estate tax reduction is not a primary concern.
For larger estates or situations where beneficiaries would face estate taxes or where assets are illiquid, a fully coordinated ILIT can protect the value of an estate while providing the necessary funds to settle obligations. An ILIT can supply immediate cash to pay taxes and debts without forcing the sale of other assets, and coordinated planning helps align life insurance with retirement accounts, trusts, and business succession plans. A thoughtful, integrated approach reduces surprises for heirs and supports orderly administration after a death.
An ILIT can provide structured distributions that protect beneficiaries from creditors, divorce claims, or poor financial decisions by delaying or limiting access to funds. The trust terms can set conditions or schedules for distributions, designate uses for proceeds, and allow the trustee to manage investments prudently. Such protections are valuable for families concerned about preserving wealth across generations and ensuring that proceeds are used in a manner consistent with the grantor’s intentions, while also maintaining privacy and reducing the potential for disputes among heirs.
A comprehensive ILIT approach coordinates life insurance with broader estate planning documents to create a cohesive plan tailored to family needs and tax considerations. By integrating an ILIT with revocable trusts, wills, powers of attorney, and healthcare directives, clients can ensure consistent beneficiary designations, clear succession instructions, and a plan that addresses liquidity and legacy goals. This approach reduces the risk of conflicting documents or unintended tax consequences and helps families understand how insurance proceeds will support their long-term objectives.
Comprehensive planning also anticipates changes in life circumstances, such as remarriage, births, or changes in asset values, and includes provisions for trust modification or coordination where allowable. Regular review and maintenance of the ILIT and related documents help ensure that the plan remains effective as laws and family situations evolve. Ongoing guidance about funding strategies, trustee roles, and potential tax implications fosters confidence that the plan will perform as intended when it matters most.
By placing a life insurance policy into an ILIT and ensuring proper timing and funding, the death benefit can be removed from the grantor’s taxable estate, potentially reducing estate taxes for larger estates. This is especially relevant when estate values approach applicable exemptions and when liquidity will be needed to cover taxes without selling assets. A carefully drafted trust and funding strategy helps preserve wealth for intended beneficiaries and supports orderly estate settlement without forcing the sale of family businesses, real estate, or other nonliquid assets.
An ILIT allows the grantor to set terms for how life insurance proceeds are distributed, which can include staged payments, conditions for use, or directions for supporting specific needs like education or medical care. These controls help protect beneficiaries from creditor claims and provide a measure of financial stewardship when heirs are younger or have limited financial experience. By naming a reliable trustee and clearly articulating distribution priorities, an ILIT supports long-term asset management aligned with family values and financial goals.
Begin funding an ILIT as early as possible to avoid timing concerns such as the three-year inclusion rule and to allow premium gifts to qualify for the annual gift tax exclusion when appropriate. Early funding reduces the risk that a recent transfer might be pulled back into the grantor’s estate and allows premiums to be paid without straining other assets. Consistent funding also creates a clear record of gifts, which is important for tax reporting and for the trustee’s administration. Early planning gives families more flexibility in aligning insurance with long-term objectives.
Ensure the ILIT is coordinated with the rest of the estate plan, including revocable trust documents, wills, powers of attorney, and healthcare directives, so that beneficiary designations and asset distributions are consistent. Coordination avoids conflicts that can complicate administration and unintentionally defeat the grantor’s intentions. Regular reviews of beneficiary designations and trust language, especially after major life events like marriage, divorce, or births, help maintain a cohesive plan. Clear alignment among documents helps reduce disputes and facilitates smoother administration when the time comes.
Consider an ILIT when you want to protect life insurance proceeds from estate inclusion, ensure liquidity to pay taxes and final expenses, or provide organized distributions to beneficiaries. An ILIT can be particularly appropriate for individuals with estates near or above estate tax thresholds, owners of a business who need to plan for succession, and those who want to exert control over how insurance proceeds are used. When combined with other estate planning tools, an ILIT helps create a tailored approach that addresses financial, familial and legacy concerns while offering privacy and orderly administration.
Other reasons to consider an ILIT include concerns about protecting proceeds from creditors or divorce claims, providing for a dependent with special needs through separate arrangements, or coordinating insurance with retirement and investment strategies. Families with complex asset structures often benefit from the predictability and control an ILIT provides. Even for smaller estates, an ILIT can serve narrow purposes, such as ensuring certain assets are preserved or providing for charitable intentions. A careful review of financial goals and family dynamics helps determine whether an ILIT aligns with overall planning objectives.
Typical circumstances that make an ILIT useful include significant estate values that could trigger taxes, a need to provide liquidity for estate settlement, or a desire to control distributions to heirs and shield proceeds from creditors. Business owners often use ILITs to fund buy-sell agreements or to provide liquidity for heirs when ownership interests are not easily sold. Families concerned about privacy or possible disputes may use an ILIT to clarity distribution instructions and avoid probate publicity. Each situation benefits from a tailored trust design to address the particular objectives and constraints involved.
When estate values approach federal or state exemption thresholds, an ILIT can be an important planning tool to reduce the potential estate tax burden by keeping life insurance proceeds outside the taxable estate. This provides liquidity for taxes without forcing the sale of other assets and helps preserve wealth for intended beneficiaries. Clients should review estate valuations and projected liabilities to determine whether an ILIT contributes meaningfully to overall tax planning and to implement proper timing and funding strategies for the trust to be effective.
Clients who own illiquid assets such as family businesses, farms, or real estate may need liquidity at death to pay taxes or debts without selling core assets. An ILIT can supply cash for these obligations through life insurance proceeds, allowing heirs to retain valuable but illiquid holdings. Planning should address the amount of coverage needed, premium funding strategies, and coordination with business succession documents. A trust that aligns with the estate’s liquidity needs helps reduce the risk of forced sales and supports orderly transitions for heirs and business partners.
An ILIT is useful when a grantor wants to control the timing and manner of distributions to beneficiaries, such as minor children or individuals with special financial circumstances. Through trust provisions, the grantor can set schedules, require trustees to make discretionary distributions for health, education, maintenance, and support, or create incentives aligned with long-term goals. This control can protect beneficiaries from creditors or ill-advised spending, and can be coordinated with other planning tools like a special needs trust to preserve eligibility for public benefits when needed.
The Law Offices of Robert P. Bergman welcomes residents of Agoura Hills and the surrounding communities to discuss whether an ILIT fits their estate planning goals. From explaining how an ILIT interacts with estate tax rules to drafting trust language and coordinating premium funding, our office guides clients through each phase of the process. We place a strong emphasis on thoughtful listening and clear explanations so families can make informed decisions about protecting life insurance proceeds, preserving assets, and ensuring that their wishes are carried out with minimal stress and confusion.
Clients choose the Law Offices of Robert P. Bergman for attentive service and straightforward guidance when establishing life insurance trusts. We focus on understanding individual family goals and tailoring trust provisions to address tax, liquidity, and distribution concerns. Our services include drafting trust documents, advising on funding strategies, helping select trustees, and coordinating the ILIT with other estate planning elements. We aim to simplify the process so that clients feel confident their plan aligns with their wishes and is prepared to support their loved ones at a difficult time.
Our approach emphasizes communication and clarity, helping clients navigate federal and state tax considerations and the timing of transfers to avoid unintended consequences. We also assist with implementing the trust, such as transferring existing policies, purchasing policies within the trust when appropriate, and documenting gifts for premium payments. By coordinating these tasks, we help ensure the ILIT functions correctly and that administration is as efficient as possible for trustees and beneficiaries after the grantor’s death.
When working with clients, we make practical recommendations about trustee options, distribution structures, and periodic plan reviews to keep the ILIT and estate plan current. We also address related matters such as pour-over wills, powers of attorney, and healthcare directives to ensure a cohesive plan. Our goal is to provide a clear path forward so families can focus on their priorities, knowing the legal documents are structured to achieve the desired outcomes when they are needed most.
Our legal process begins with a detailed conversation to understand family dynamics, asset composition, life insurance needs, and planning goals. From there we recommend an approach—whether transferring an existing policy into an ILIT or setting up the trust to acquire a new policy—and draft trust documents reflecting the desired distribution rules and trustee powers. We then assist with funding and documentation for premium gifts and coordinate the ILIT with other estate planning documents. We finish with a review meeting to ensure clients understand how the trust will operate and what steps trustees will take at the appropriate time.
In the initial phase we gather information about assets, current insurance policies, family needs, and objectives. This helps determine whether an ILIT aligns with the client’s goals and how it should be structured. We discuss timing considerations, potential tax implications, trustee selection, and coordination with other estate planning tools. Based on that discussion, we propose a plan that outlines trust terms, funding strategies, and steps to implement the ILIT so the client can decide how to proceed with confidence.
We compile a comprehensive view of the client’s financial landscape, including existing life insurance policies, retirement accounts, real property, business interests, and anticipated liabilities. We also discuss family structure and beneficiary preferences to ensure the trust fits personal objectives. This information allows us to estimate coverage needs and design trust provisions that match the intended legacy plan. A careful review at this stage helps prevent conflicts among documents and clarifies whether an ILIT will accomplish the client’s goals without unintended tax or administrative complications.
After identifying goals and constraints, we draft an ILIT that specifies trustee powers, beneficiary designations, distribution terms, and provisions for premium funding and trust administration. The trust language addresses common concerns such as creditor protection, distribution timing, and coordination with other planning documents. We discuss options for trustee appointment and succession, record-keeping practices for gifts, and steps to ensure premium payments qualify for any applicable gift tax exclusions. Clear drafting at this stage reduces ambiguity and eases administration later on.
Once the trust document is finalized, we assist with implementation tasks such as transferring ownership of an existing policy into the ILIT, coordinating the purchase of a new policy by the trust when appropriate, and documenting gifts used to pay premiums. Accurate documentation and timely actions are essential to ensure the trust functions as intended and to avoid tax issues. We provide guidance on gift structuring and help clients prepare any necessary notices or forms to create a clear administrative record for trustees and tax reporting.
If transferring a policy to the ILIT, we handle ownership assignments and notify the insurance company of the change so the trust becomes the legal owner and beneficiary. For new policies, we coordinate with insurers to ensure the trust purchases the policy directly or in a manner consistent with the plan. The process includes verifying premium amounts, payment methods, and beneficiary designations so the trust properly holds the policy. Timely execution and proper paperwork help avoid unnecessary complications and support the trust’s intended benefits.
We assist clients in structuring gifts to the ILIT for premium payments, preparing records that demonstrate annual exclusion usage or other tax treatments as appropriate. Proper documentation of gifts, bank transfers, and trustee receipts is important for both administration and potential tax inquiries. We also advise on whether any additional tax filings may be required and provide templates for trustee acknowledgement of gifts. Maintaining clear records at implementation simplifies future administration and supports compliance with applicable tax rules.
After the trust is funded and the insured passes away, the trustee files claims with the insurer, collects proceeds, and administers distributions according to the trust terms. The trustee’s responsibilities include maintaining records, paying debts or taxes as directed, investing trust assets prudently, and making distributions to beneficiaries. We provide guidance to trustees on required steps, documentation, and any necessary tax filings to facilitate a timely and orderly administration. Clear trust instructions reduce the potential for disputes and help ensure beneficiaries receive assets as intended.
When the insured dies, the trustee files the death claim with the life insurance company, submits required documentation, and follows up until proceeds are received. The trustee then reviews the trust terms to determine how proceeds should be allocated, whether immediate distributions are appropriate, or whether funds should remain invested for future scheduled distributions. Trustees should keep beneficiaries informed, maintain transparent records, and coordinate with legal and tax advisors to ensure the process complies with trust provisions and relevant laws.
After collecting proceeds and addressing required obligations, the trustee distributes assets according to the trust’s distribution plan, which may include lump-sum payments, staged releases, or discretionary distributions for specific needs. The trustee prepares a final accounting for beneficiaries, resolves any outstanding administrative matters, and, if required by the trust, winds up the trust’s affairs. Proper closure involves documentation of distributions, tax filings, and communication with beneficiaries to confirm that the grantor’s intentions have been honored and the trust’s purpose fulfilled.
An irrevocable life insurance trust is a separate legal entity created to own life insurance policies and receive proceeds outside the grantor’s probate estate. The trust is legally distinct from the grantor and, once established and funded, generally cannot be altered by the grantor. Ownership by the trust means policy proceeds are paid to the trust at death and distributed according to the trust’s terms, often providing privacy and potential estate tax planning advantages. The trustee administers the policy and handles claims, premium payments, and distributions in accordance with the trust language. Careful drafting ensures trustee powers and distribution rules align with the grantor’s objectives. Setting up an ILIT involves drafting the trust, selecting a trustee, transferring ownership or ensuring the trust purchases a policy, and documenting gifts for premium payments. Timing matters because transfers made within a short period prior to death can affect tax treatment. Proper funding and clear trustee duties streamline administration and help prevent disputes among beneficiaries. Coordination with other estate planning documents is recommended to maintain consistency and avoid conflicts that could frustrate the grantor’s intentions.
Placing a life insurance policy in an ILIT can reduce the likelihood that the policy’s death benefit will be included in the grantor’s taxable estate, which may lower estate taxes for larger estates. This result depends on proper ownership transfer and the timing of gifts used to pay premiums. If the policy is transferred to the trust too close to the date of death, certain rules may cause inclusion in the estate, so timing and documentation are critical. A well-funded ILIT that complies with tax rules is more likely to achieve the intended estate tax benefit. Estate tax outcomes also depend on overall estate value, current tax law, and whether transfers are documented to qualify for gift tax exclusions. Coordination with other planning elements, including retirement accounts and property ownership structures, is important. Regular reviews ensure the ILIT remains effective in light of changes in asset values, family circumstances, and tax law, allowing adjustments where permissible and advisable.
Gifts to an ILIT used to pay policy premiums may be treated as present interest gifts and can qualify for the annual gift tax exclusion when structured properly. Grantors often provide the trustee with annual gifts sufficient to cover premiums and document the gifts so they meet exclusion requirements. The trustee’s acknowledgment of receipt and records of payments are important to demonstrate the excluded gifts. Proper planning helps avoid unintended gift tax liability while enabling the ILIT to remain funded to pay premiums over time. If gifts exceed annual exclusion amounts, gift tax filing may be required and could use a portion of the grantor’s lifetime gift and estate tax exemption. Additionally, transferring an existing policy into an ILIT shortly before death may trigger inclusion under the three-year rule, which can negate estate tax benefits. Careful coordination of gift amounts, timing, and documentation is essential to achieve intended tax outcomes and avoid surprises in administration.
Selecting the right trustee affects day-to-day administration, record keeping, and the manner in which proceeds are distributed upon death. A trustee should be someone willing and able to fulfill duties such as paying premiums, maintaining documentation of gifts and receipts, filing any required tax returns, and communicating with beneficiaries. The trustee’s judgment influences investment, distribution decisions, and conflict resolution. Clients may choose a trusted individual, a professional fiduciary, or an institutional trustee based on preferences for impartiality and continuity. Trustee choice also impacts the trust’s longevity and how well the grantor’s intentions are carried out. An institutional trustee may offer experience and continuity, while an individual trustee may provide personal knowledge of family circumstances. Clients should consider successor trustees and provisions for trustee compensation or reimbursement to ensure smooth administration over the life of the trust.
You can transfer an existing life insurance policy into an ILIT, but timing matters because policies transferred within three years of the grantor’s death may be included in the estate under federal rules. To mitigate this risk, some clients have the ILIT purchase new policies instead of transferring existing ones, or they transfer policies well before the three-year window. Proper notification to the insurance company and documentation of ownership assignment are necessary to reflect the trust as policy owner and beneficiary. Transferring a policy also requires attention to any policy loans, cash values, and authorization forms required by the insurer. The trustee must be able to manage premium obligations and maintain records of all transactions. Advance planning avoids last-minute transfers that could jeopardize the ILIT’s intended benefits and helps preserve the trust’s effectiveness for estate planning purposes.
When the insured dies, the trustee files a claim with the life insurance company and provides required documentation to receive the policy proceeds. The trustee then follows the trust’s distribution instructions, which may call for immediate lump-sum distributions, installment payments, or discretionary distributions for specific purposes such as education, health, maintenance, and support. The trustee’s role includes maintaining records of distributions, providing accountings to beneficiaries if required, and investing any retained funds prudently until distribution. There may be tax or administrative matters to address, such as filing tax returns or paying debts as directed by the trust. Clear trust provisions and trustee guidance help ensure proceeds are distributed in accordance with the grantor’s wishes, and beneficiaries receive timely and appropriate support while minimizing administration delays and disputes.
An ILIT generally operates independently of a revocable living trust or will, but coordination is important to avoid conflicting beneficiary designations and to ensure an orderly transfer of assets. For example, the revocable trust may hold other assets while the ILIT holds life insurance, and the pour-over will can be used to direct assets to the revocable trust on death. Proper alignment ensures that life insurance proceeds held by the ILIT are distributed according to its terms while other estate assets pass under the revocable trust or will as intended. Coordinating documents also helps clarify roles and avoids unintended beneficiary overlaps or omissions. During plan reviews, we confirm that beneficiary designations, trustee provisions, and will or trust provisions work together so the overall estate plan reflects the grantor’s objectives and minimizes administrative friction at the time of death.
A simpler beneficiary designation may be preferable when estate values are modest, or when the primary goal is immediate liquidity without complex administration. Naming beneficiaries directly on a life insurance policy or keeping the policy within a revocable trust can avoid the complexity of establishing and maintaining a separate irrevocable trust. This approach reduces administrative tasks and may be appropriate when estate tax exposure is unlikely or when family dynamics do not require structured distributions. However, simpler designations may expose policy proceeds to probate or estate inclusion and offer less protection from creditors or divorce claims. Individuals should weigh privacy, creditor protection, and tax considerations against the convenience of a straightforward beneficiary designation. A discussion of goals and asset values helps determine whether a simple approach or an ILIT better meets long-term needs.
Estate plans, including ILITs, should be reviewed periodically and after significant life events such as marriage, divorce, births, deaths, or major changes in asset values. Reviews ensure trust provisions, beneficiary designations, and funding arrangements remain aligned with current goals and legal changes. Regular check-ins help identify necessary updates to trustee appointments, distribution instructions, and premium funding strategies so the ILIT continues to function effectively and in harmony with the rest of the estate plan. Additionally, tax law changes or shifts in estate size may require adjustments in planning. Scheduling reviews every few years or as circumstances change helps maintain an effective plan. Communicating with trustees and beneficiaries about the trust’s existence and provisions, when appropriate, can also reduce confusion and ease administration when the trust becomes operative.
To begin creating an ILIT, contact our office to schedule an initial consultation where we will discuss your family situation, current insurance policies, assets, and planning goals. During this meeting we explain ILIT basics, timing considerations, trustee options, and how the trust will coordinate with your other estate planning documents. Based on that conversation, we propose a plan and outline the next steps for drafting, implementation, and funding so you can make informed choices about moving forward. If you decide to proceed, we prepare trust documents tailored to your objectives, assist with transferring or issuing policies in the trust’s name, and help document gifts for premium payments. We also provide guidance for trustees and coordinate with other advisors as needed to ensure a smooth and effective implementation of the ILIT within your overall estate plan.
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