An Irrevocable Life Insurance Trust (ILIT) can play a pivotal role in a comprehensive estate plan for individuals and families in Universal City and throughout California. An ILIT is a document-based arrangement that holds life insurance policies outside of the insured’s taxable estate, with the intention of providing liquidity, paying estate settlement costs, and delivering benefits to beneficiaries according to the trust’s terms. Deciding whether an ILIT fits your circumstances requires careful review of family dynamics, current and future tax laws, and the interaction of the trust with other estate planning tools, such as revocable living trusts, wills, and powers of attorney.
This guide explains how an ILIT functions, when it may be appropriate to include one in your estate plan, and what steps the Law Offices of Robert P. Bergman recommends when creating or funding an ILIT in Universal City. We will cover the fundamental documents that often accompany an ILIT — including pour-over wills, trust certifications, and health care directives — and describe practical considerations for funding the trust, naming trustees and beneficiaries, and coordinating with retirement plan trusts and special needs planning. Our goal is to provide clear, actionable information to help you make informed decisions for your family’s future.
An ILIT can deliver a number of benefits for California families by removing life insurance proceeds from an estate, which may reduce estate tax exposure and ensure a smoother distribution to intended recipients. Beyond potential tax advantages, an ILIT can provide liquidity to cover estate administration costs, mortgage balances, and other obligations, preventing the need to sell assets in difficult times. The trust also enables grantors to place conditions on distributions, protect proceeds from creditors, and designate trustees to manage funds responsibly for beneficiaries. Establishing an ILIT requires careful drafting and ongoing administration to preserve intended benefits.
The Law Offices of Robert P. Bergman assists clients across California with tailored estate planning, including the preparation and administration of Irrevocable Life Insurance Trusts. Our approach emphasizes clear communication, thoughtful document drafting, and coordination with financial advisors and insurance carriers to ensure the ILIT functions as intended. We focus on practical solutions that reflect each client’s goals, whether preserving family wealth, providing for minor or dependent beneficiaries, or protecting assets from future claims. We prioritize a collaborative process that helps grantors and trustees understand their roles and obligations under California law.
An Irrevocable Life Insurance Trust is a separate legal entity that owns and controls life insurance policies on the life of the grantor, who transfers ownership into the trust and relinquishes control. Once created and funded, the policy’s proceeds are payable to the trust and distributed according to the trustee’s instructions for the benefit of named beneficiaries. The timing of funding, the designation of the trustee and beneficiaries, and the manner of premium payments are critical to preserving the trust’s intended legal and tax characteristics. Understanding these moving parts is essential before establishing an ILIT.
Because an ILIT requires the grantor to give up ownership and control over the insurance policy, it cannot be modified unilaterally once properly executed without potential tax or legal consequences. Premium payments are often made by the grantor to the trust through annual gifts, and gift tax considerations must be addressed. The trust instrument can include detailed distribution provisions to protect beneficiaries, accommodate needs such as education or healthcare, and coordinate with special vehicles like special needs trusts or retirement plan trusts. Proper administration and clear record-keeping are key to achieving the trust’s purposes.
An ILIT is an irrevocable trust specifically designed to own life insurance policies. The grantor transfers a policy, or the trust purchases a policy, and the trust becomes the legal owner and beneficiary. Because the trust holds the policy, the proceeds are not included in the grantor’s probate estate, subject to applicable tax rules. Trustees manage and distribute proceeds according to the trust terms, which can address income needs, future expenses, and protections against creditor claims. The drafting must consider potential estate tax rules, gift tax implications, and the timing of policy transfers to achieve the desired outcomes.
Establishing an ILIT typically involves drafting the trust instrument, selecting a trustee, transferring ownership of an existing policy or arranging for the trust to purchase a new policy, and coordinating premium payments in a manner consistent with tax laws. The trust document should include clear beneficiary designations, distributions rules, provisions for successor trustees, and instructions for handling policy loans or changes. Trustees must keep accurate records of gifts made for premium payments, as annual exclusion gifts are common. Close coordination with insurance carriers and financial advisors helps prevent administrative mistakes that could undermine the trust’s benefits.
Understanding common terms used with ILITs helps grantors and beneficiaries navigate the planning process. Terms such as grantor, trustee, beneficiary, trustee powers, gift tax, estate inclusion, premium payments, and policy assignment arise regularly in ILIT discussions. Familiarity with related documents like pour-over wills, certification of trust, and durable powers of attorney will also streamline coordination among estate planning instruments. Clear definitions and practical examples reduce confusion during setup and administration and ensure that the ILIT operates in harmony with the remainder of your estate plan.
The grantor, sometimes called the settlor, is the person who creates the trust and transfers the policy or funds into it. Once the grantor places a life insurance policy into an ILIT, they generally give up ownership and direct control over the policy, which is a fundamental characteristic of the arrangement. The grantor often provides the funds for premium payments through gifts to the trust, and the trust instrument sets out who may serve as trustees and how benefits should be distributed to beneficiaries following the grantor’s death.
A trustee is the individual or institution that manages the trust assets, including any life insurance policies owned by the ILIT. The trustee has fiduciary duties to administer the trust in accordance with the trust document and applicable law. Duties include paying premiums, filing necessary reports, making distributions per the trust’s terms, and providing accountings to beneficiaries when required. Choosing a trustee who understands the administrative obligations and legal responsibilities under California law helps ensure the ILIT meets its intended goals and protects beneficiary interests.
Beneficiaries are the individuals or entities designated to receive the life insurance proceeds from the ILIT after the insured’s death. The trust document governs how and when distributions are made to beneficiaries, which can include outright distributions, staggered payments, or discretionary support for health, education, maintenance, and support. Proper identification of beneficiaries and consideration of their needs—such as minor children, dependents with special needs, or beneficiaries with creditor exposure—inform the trust’s distribution provisions and can safeguard assets for intended purposes.
Gift tax and estate inclusion rules determine how transfers to the trust and trust-owned policy proceeds are treated for federal and state tax purposes. Annual exclusion gifts are frequently used to fund premium payments, and in some cases, advance planning with gift-splitting or larger lifetime transfers may be considered. If the grantor retains certain control rights or recently transferred a policy and dies within a specified period, the proceeds may be included in the grantor’s estate. Careful drafting and disciplined administration help minimize adverse tax consequences and maintain the trust’s objectives.
Choosing between an ILIT and other options, like keeping insurance policies inside a revocable living trust or naming beneficiaries directly, depends on your goals for tax planning, creditor protection, and distribution control. A revocable trust offers flexibility because it can be changed during the grantor’s lifetime, while an ILIT requires irrevocability to achieve removal of life insurance proceeds from the taxable estate. Direct beneficiary designations are simple but provide less control over how proceeds are used. Understanding the trade-offs among these approaches allows for a tailored plan adapted to family needs and financial circumstances.
For individuals with modest estates and minimal concerns about federal estate tax exposure, maintaining a life insurance policy outside of a trust with a direct beneficiary designation can suffice. If your main goal is to provide immediate cash to survivors without complex distribution rules or extended administration, a straightforward beneficiary designation paired with a will or revocable trust may meet your needs. This approach reduces administration and drafting complexity and can be appropriate when creditor protection and estate tax minimization are not primary concerns.
When flexibility to change beneficiaries or policy ownership during your lifetime is a priority, avoiding an irrevocable trust may be appropriate. Revocable arrangements allow you to adjust coverage, switch trustees, or change designated beneficiaries as circumstances evolve. This flexibility can be valuable for individuals who anticipate significant life changes, such as remarriage, changing family responsibilities, or shifting financial priorities. However, the greater freedom comes with potential drawbacks in creditor protection and estate tax planning that should be weighed carefully.
When estate tax exposure or complex liquidity needs arise, a comprehensive ILIT approach can provide structured solutions that simple beneficiary designations cannot. Through careful timing of policy transfers, gift planning, and coordination with other trusts and estate documents, an ILIT can help ensure life insurance proceeds are available to pay estate administration expenses, debts, and taxes without forcing the sale of family assets. This structured planning is especially relevant for business owners, property holders, and families who value orderly distributions and long-term asset protection.
A comprehensive strategy considers not only immediate tax and liquidity outcomes but also the long-term needs of beneficiaries, including minors and dependents with limited resources. Custom distribution provisions, trustee selection, and coordination with special needs trusts or retirement plan trusts can all be part of a broader plan that ensures insurance proceeds are used according to your wishes. Planning in this way reduces ambiguity, helps prevent disputes, and aligns the disposition of life insurance benefits with your overall estate objectives and family priorities.
Integrating an ILIT with your broader estate plan enhances the ability to manage tax exposures, provide liquidity, and protect assets for beneficiaries. When you coordinate the ILIT with documents like a revocable living trust, last will and testament, powers of attorney, and healthcare directives, you create consistent, reinforced directions that reduce the likelihood of conflicting instructions and administrative delays. This integration also helps ensure trustees and fiduciaries have the authority and guidance needed to act quickly and responsibly after the grantor’s passing.
A comprehensive approach also allows for contingency planning and adaptive provisions. For example, a pour-over will can ensure remaining assets flow into a primary trust, while certification of trust documents support third-party interactions with banks and insurers. Inclusion of guardianship nominations and HIPAA authorizations provides an orderly transition for health care decisions and minor children’s care. Altogether, these coordinated measures offer families greater peace of mind that affairs will be handled according to carefully considered intentions.
One of the most practical benefits of an ILIT is ensuring that liquid funds will be available to pay estate administration costs, taxes, and debts after the grantor’s death. Life insurance proceeds owned by the trust can be distributed promptly to cover immediate obligations, reducing pressure to liquidate illiquid or sentimental assets. Properly structured ILIT proceeds can help executors and trustees settle estates efficiently, maintain family businesses or real property intact, and support beneficiaries while longer-term planning and tax matters are resolved.
An ILIT can provide control over how proceeds are used, protecting beneficiaries from mismanagement, creditor claims, or unintended outcomes. Trust terms can require distributions be made for specific purposes, set staggered distributions over time, or permit discretionary distributions by the trustee for health, education, maintenance, and support. These protections are particularly helpful when beneficiaries include minors, young adults, or individuals facing financial vulnerabilities. Thoughtful drafting balances beneficiary needs with grantor intent to promote lasting financial security.
When funding premiums for an ILIT, it is important to plan gifts carefully to make use of annual exclusion amounts and preserve tax advantages. Many grantors make annual gifts to the trust specifically designated for premium payments and maintain clear records of those gifts. Proper documentation helps trustees demonstrate that payments were made under permitted exclusions and reduces the risk of unintended tax consequences. Discussing premium funding strategies with your financial advisor helps ensure the ILIT is funded sustainably and aligned with broader financial plans.
Maintaining up-to-date trust documents and clear records of insurance policies, premium payments, and communications with carriers helps streamline administration after the grantor’s death. Provide copies of essential documents — including the certification of trust, policy information, and trustee contact details — to trusted advisors and successor trustees as appropriate. Organized records reduce delays in claims processing and support transparent distribution to beneficiaries, ensuring the ILIT serves its intended purpose efficiently when it is needed most.
You may consider an ILIT if your estate could face significant administration costs or potential estate tax exposure, if you want to assure immediate liquidity for surviving family members, or if you want to control how life insurance proceeds are used after your passing. ILITs are also useful when beneficiaries might face creditor claims or when the grantor wishes to restrict outright distributions to preserve assets for future needs. Reviewing your assets, family situation, and broader estate plan helps determine whether an ILIT aligns with your objectives.
An ILIT is also appropriate if you want to integrate life insurance into specialized arrangements, such as providing for a surviving spouse while preserving wealth for children, supporting a special needs trust without disrupting public benefits, or ensuring business continuity. Coordination with retirement plan trusts, pour-over wills, and healthcare directives enhances the overall effectiveness of an ILIT. Because creating and funding an ILIT involves legal and administrative steps, careful planning and ongoing oversight are important to preserve the intended results over time.
Typical scenarios that lead clients to consider an ILIT include high-net-worth individuals concerned about estate tax exposure, business owners seeking liquidity for succession planning, parents wishing to protect proceeds for minor children, and those who want to keep insurance proceeds out of probate. In other circumstances, individuals with significant illiquid assets such as real estate may want a source of liquid funds at death. Each situation requires tailored drafting to address family dynamics and financial goals while complying with applicable laws.
An ILIT can ensure funds are available to pay estate administration expenses, outstanding debts, and taxes without forcing the sale of family assets that may be illiquid or have sentimental value. By holding life insurance proceeds in a trust, estates can access cash quickly, giving personal representatives and trustees the ability to meet obligations and stabilize family finances in the immediate aftermath of a death. This planning reduces the pressure on surviving family members and supports orderly settlement of estate affairs.
When beneficiaries face potential creditor exposure or litigation risk, directing life insurance proceeds into a trust can provide a layer of protection that direct beneficiary designations may not offer. Trust distribution provisions can limit outright ownership of proceeds, allow trustees to manage funds for beneficiaries’ needs, and create structures that are less vulnerable to individual creditor claims. For families seeking to safeguard long-term financial support against unexpected liabilities, an ILIT offers protective features when properly drafted and administered.
Parents often use ILITs to direct life insurance proceeds for the ongoing care, education, and support of children and dependents, including those with special needs. The trust can provide age-triggered or needs-based distributions, ensuring funds are available for future milestones without allowing full control to a young beneficiary. Combining an ILIT with other tools like guardianship nominations and special needs trusts promotes continuity of care and prudent financial management for dependent beneficiaries over the long term.
We assist residents of Universal City and nearby communities with all aspects of life insurance trust planning and related estate planning documents. Our practice includes drafting ILITs, coordinating transfers of existing policies, establishing premium funding strategies, and advising trustees on administration. We also prepare ancillary documents such as pour-over wills, advance health care directives, HIPAA authorizations, and guardianship nominations to create a cohesive plan. Our office will work with your financial and insurance advisors to implement a plan that reflects your goals and family circumstances in California.
Clients select our firm for estate planning because we emphasize clear communication, practical document drafting, and careful coordination with financial professionals to implement an ILIT that operates as intended. We focus on producing durable documents, explaining trustee obligations, and ensuring that premium funding and policy ownership transfers preserve the trust’s benefits. Our process includes reviewing the overall estate plan to avoid conflicts and to align the ILIT with existing trusts, wills, and beneficiary designations, which promotes a consistent plan for your family’s future.
We prioritize straightforward guidance throughout the ILIT process, from initial consultation through document execution and follow-up administration. Clients appreciate our attention to administrative details such as gift documentation, trustee powers, and insurance carrier requirements, which help prevent technical errors that could undermine the trust. We strive to make the process clear and manageable, offering solutions tailored to your needs and providing practical steps to maintain the trust effectively over time.
Our representation extends beyond drafting to advising trustees and beneficiaries on procedural matters that arise during the life of the trust and at the time of claim. Whether coordinating beneficiary notices, managing policy loans, or supporting trustees with accountings and distributions, we help clients navigate the tasks required for proper trust administration. This hands-on approach supports reliable outcomes and gives families confidence that the trust will fulfill its intended role when it is most needed.
Our process begins with an initial consultation to understand your family structure, financial assets, and objectives for life insurance proceeds. We review existing estate planning documents, insurance policies, and beneficiary designations to identify coordination needs. Following this review, we propose draft trust language tailored to your goals, advise on trusteeship and funding strategies, and outline steps for transferring policies or arranging new coverage. After document execution, we provide guidance on funding, recordkeeping, and trustee responsibilities to ensure the trust is administered in accordance with its terms.
The first step involves a thorough review of your current estate plan, insurance policies, and financial objectives. We discuss family dynamics, potential creditor issues, and the specific purposes you want an ILIT to serve, such as providing liquidity, protecting beneficiaries, or preserving assets for future generations. This conversation helps us determine whether an ILIT is appropriate and informs the design of the trust document. We also identify any immediate administrative tasks required to avoid unintended tax or legal consequences.
We request copies of existing insurance policies, beneficiary designations, current trusts and wills, and financial statements to assess how an ILIT would integrate with your plan. Accurate and complete information enables us to advise on the timing of transfers, potential gift tax implications, and whether new policies should be purchased by the trust. Gathering these materials early allows us to identify any gaps or conflicts and propose solutions that preserve the intended benefits of an ILIT while maintaining consistency across documents.
During the initial planning stage we discuss who will serve as trustee, how premium payments will be funded, and whether annual exclusion gifts or other funding strategies are appropriate. Trustee selection includes assessing the individual or institution’s willingness and ability to handle administrative tasks, maintain records, and coordinate with insurers. Clear decisions about funding and trusteeship at the outset reduce the risk of future complications and make implementation of the ILIT more straightforward and reliable.
Once we have a clear plan, we draft the ILIT document with distribution provisions, trustee powers, and administrative instructions tailored to your goals. The drafting process accounts for California law, gift tax considerations, and coordination with existing estate documents such as pour-over wills and health care directives. After you review and approve the draft, we arrange for execution consistent with legal formalities, provide certified copies to relevant parties, and prepare any ancillary documents needed to transfer policy ownership or notify insurance carriers.
Execution involves signing the trust documents and completing the necessary assignments or beneficiary changes with insurance carriers to transfer ownership to the ILIT. We work closely with insurers to confirm procedural requirements and ensure proper recording of ownership changes to avoid delays. Proper execution and timely communication with carriers are essential to achieving the trust’s intended tax and administrative treatment, and our team assists with the necessary forms and follow-up to confirm the transfer is effective.
After the trust owns the policy, establishing a clear gift funding mechanism for premium payments is critical. We advise on using annual exclusion gifts, beneficiary loan arrangements where appropriate, and thorough recordkeeping to document gifts made to the ILIT for premiums. Proper documentation supports trustee actions and reduces the risk of future disputes or tax issues. We provide guidance on maintaining records and communicating with trustees and beneficiaries about the trust’s funding plan.
Ongoing administration includes paying premiums, maintaining records of gifts and disbursements, and periodically reviewing the ILIT in light of changes to family circumstances or tax laws. Trustees should provide accountings to beneficiaries as required and consult counsel when making discretionary distributions or handling claims. Periodic reviews also ensure that policy design, beneficiary needs, and related estate planning documents remain aligned. We provide continuing support to trustees and beneficiaries to address administrative questions and to update documents when lawful and appropriate.
Trustees are responsible for keeping accurate records of premium payments, gifts made for premiums, correspondence with insurance carriers, and any distributions from the trust. Well-organized records facilitate timely claims processing and provide transparency to beneficiaries. Trustees should also be mindful of deadlines for tax reporting and be prepared to consult counsel about complex administrative issues. Clear procedures and consistent documentation help preserve the trust’s intended benefits and reduce the risk of disputes among family members.
Because an ILIT is irrevocable, substantive amendments are limited, but periodic reviews help ensure the trust’s administration remains appropriate over time. Reviews look at policy performance, funding sufficiency, the suitability of trustee and beneficiary arrangements, and any changes to tax or probate law that could affect the trust. Where adjustments are possible without jeopardizing the trust’s nature, we advise on practical measures to keep the plan aligned with objectives. Regular check-ins help prevent unintended consequences and maintain effectiveness.
An Irrevocable Life Insurance Trust is a trust created to own and control life insurance policies. When properly established and funded, the trust becomes the legal owner and beneficiary of the policy, and proceeds are paid to the trust upon the insured’s death. The trustee then administers distributions according to the trust terms. Because ownership is transferred to the trust, the policy proceeds may be kept out of the grantor’s probate estate, subject to certain timing and retention rules. This structure is often used to provide liquidity for estate settlement and to control distribution to beneficiaries. Setting up an ILIT requires giving up ownership and control of the policy, and the trust must be drafted and administered carefully to achieve the intended tax and administrative benefits. Premium payments are most commonly made by the grantor as gifts to the trust, which the trustee then applies to the policy. Proper documentation and coordination with insurance carriers help ensure the ownership change is recognized and the trust functions as designed under applicable law.
Transferring a life insurance policy into an ILIT can remove the proceeds from the grantor’s taxable estate, but certain conditions must be met to accomplish that result. One primary consideration is timing: if the insured dies within a specified period after transferring ownership, the proceeds may still be included in the estate under applicable rules. Additionally, retaining certain rights or controls over the policy can cause estate inclusion. Therefore, planning the transfer and avoiding retained powers are essential to minimize the risk of estate inclusion. Careful administration and recordkeeping are also necessary to preserve the intended treatment. Trustees should document gifts made to the trust for premium payments and follow formal procedures for policy transfers. Consulting with counsel and coordinating with insurers during the transfer helps ensure that the ILIT achieves its goals and that potential pitfalls are addressed before they affect the estate outcome.
Premiums for an ILIT are typically funded by annual gifts from the grantor to the trust, using the annual gift tax exclusion where appropriate. The grantor makes a gift to the trust, and the trustee applies those funds to pay the insurance premiums. In many cases, the grantor provides a check each year with a letter of direction to the trustee, who deposits the funds and pays the carrier. Proper documentation of those gifts is important to substantiate their use for premium payments. Alternative funding approaches may be considered in certain circumstances, such as establishing a separate trust funding vehicle or making larger lifetime gifts if consistent with overall tax planning. Each funding choice has administrative and tax implications, and the trustees should follow clear procedures for recording gifts, maintaining receipts, and communicating with beneficiaries about the trust’s funding strategy.
Choosing a trustee involves evaluating who will reliably carry out administrative duties, pay premiums on time, and manage distributions according to the trust terms. Trustees may be family members, trusted friends, or institutional trustees, each offering different advantages. Individual trustees can provide personal attention, while institutional trustees offer administrative resources and continuity. Regardless of the choice, trustees should understand recordkeeping responsibilities and be willing to coordinate with insurers and legal counsel when necessary. Trust documents should provide for successor trustees and clear instructions for trustee actions to avoid delays in administration. Discussing the role with prospective trustees in advance helps confirm their willingness and ability to serve. Where complex financial administration or impartial decision-making is needed, a corporate trustee or co-trustee arrangement can provide professional support while maintaining oversight aligned with the grantor’s intent.
Because an ILIT is irrevocable by design, changing its substantive terms after execution is generally limited. The grantor typically gives up the ability to unilaterally modify the trust’s provisions without risking adverse tax or legal consequences. Some narrow modifications may be possible through trustee powers or by following permitted procedures set out in the document and applicable law, but any changes should be approached cautiously and with legal counsel’s guidance to avoid unintended results. Periodic reviews of the trust’s administration and surrounding estate plan can identify issues and suggest lawful adjustments in coordination with related instruments. In some cases, new planning documents can be added to the overall estate plan to address changed circumstances, while preserving the integrity of the existing ILIT. Clear initial drafting that anticipates likely future needs helps reduce the desire for post-creation changes.
An ILIT should be coordinated with other estate planning documents to ensure consistent treatment across your overall plan. Relevant documents include revocable living trusts, pour-over wills, financial powers of attorney, advance health care directives, and any special needs trusts or retirement plan trusts. Coordination avoids conflicting beneficiary designations and clarifies how different assets will be distributed upon death. For example, a pour-over will ensures remaining nontrust assets are transferred to a primary trust, maintaining alignment across documents. Coordination also extends to practical matters such as beneficiary designations on accounts and retirement plans. Reviewing these designations alongside the ILIT helps prevent unintended outcomes where a beneficiary designation overrides the trust or creates competing claims. Regular estate plan reviews ensure alignment as financial circumstances and family relationships evolve.
When the insured dies, the life insurance carrier pays the policy proceeds to the ILIT as the named beneficiary and policy owner. The trustee then administers those proceeds according to the trust’s distribution provisions, which may provide for immediate payments, staged distributions over time, or discretionary distributions for beneficiaries’ needs. Trustees must follow the documented instructions, manage funds prudently, and provide any required accountings. Because proceeds are held by the trust, they can be used to cover estate settlement costs and other obligations without passing through probate. Prompt communication with the insurer and timely filing of claims are important to ensure swift receipt of proceeds. Trustees should gather necessary documentation and consult counsel when distribution questions or creditor claims arise. Well-drafted trust provisions and clear trustee guidance help facilitate efficient distribution and reduce the potential for disputes among beneficiaries.
Gifts made to an ILIT to fund premium payments may have gift tax reporting requirements depending on the size and structure of the gifts. Many grantors rely on the annual gift tax exclusion for premium funding, which reduces or eliminates the need to file a gift tax return for those transfers if the amounts are within the exclusion limit. However, larger outright gifts or certain funding arrangements may require filing Form 709 and careful tax planning to address lifetime exemption use and gift-splitting issues between spouses. Accurate recordkeeping of annual gifts and any filings is critical to support the trust’s administration and tax position. Trustees and grantors should track gift dates, amounts, and contemporaneous written directions when making payments to the trust. Consulting with tax counsel or a tax advisor ensures compliance with reporting obligations and helps maximize the benefits of available exclusions and exemptions.
An ILIT can be integrated with special needs planning to provide for a dependent while preserving eligibility for government benefits. Instead of distributing proceeds directly to the individual with special needs, the ILIT can direct funds to a properly drafted special needs trust, or the trust document itself can include provisions that address supplemental needs without undermining public benefits. The goal is to provide quality of life enhancements while maintaining benefits such as Medi-Cal and Supplemental Security Income when appropriate. Coordination between the ILIT and the special needs trust is essential to avoid unintended disqualifications and to manage distributions effectively. Working with counsel familiar with benefits rules and trust design helps create complementary structures that support the dependent’s long-term well-being without jeopardizing vital public assistance.
To begin creating an ILIT in Universal City, contact our office to schedule an initial consultation where we will review your estate planning goals, existing documents, and insurance policies. During that meeting we will explain the steps involved in establishing an ILIT, discuss trustee selection and funding options, and identify any coordination work needed with other parts of your estate plan. This initial assessment helps determine the most appropriate trust design for your circumstances and identifies administrative steps required for successful implementation. Following the consultation, we prepare draft trust documents, assist with policy transfers or trust-owned policy purchases, and guide the funding process to ensure compliance with applicable rules. We also provide instructions for recordkeeping and trustee responsibilities to preserve the trust’s intended benefits. Throughout the process we aim to make implementation straightforward while protecting your family’s interests.
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