An Irrevocable Life Insurance Trust, often called an ILIT, can be a powerful estate planning tool for families in San Anselmo and throughout Marin County. At the Law Offices of Robert P. Bergman we help clients understand how an ILIT works to remove life insurance proceeds from the estate for potential tax and creditor protection purposes while ensuring efficient wealth transfer to beneficiaries. This page explains the purpose of an ILIT, who should consider one, how it is funded and administered, and typical documents that work together with an ILIT as part of a full estate plan designed for California residents.
Choosing whether to create an ILIT involves both personal and financial considerations. Many clients come to us wanting a durable plan that protects their family, supports long-term goals and reduces the chances of unnecessary delays after death. We discuss how an ILIT interacts with revocable living trusts, wills, powers of attorney and health care directives to produce a coordinated plan that reflects a client’s wishes. This section provides clear, practical information to help homeowners, business owners and individuals in San Anselmo think through the steps involved in establishing and managing an ILIT.
An ILIT can offer distinct benefits for estate administration and legacy planning by holding life insurance policies outside of your taxable estate, which may reduce estate tax exposure for beneficiaries and streamline distribution of proceeds. For families with significant assets or specific distribution goals it offers a controlled mechanism to ensure death benefits are used as intended, such as paying estate settlement costs, providing ongoing support for minor children, or funding trust distributions over time. Additionally, an ILIT can help insulate proceeds from certain creditor claims when properly drafted and funded, creating a more predictable outcome for loved ones after the insured person passes away.
The Law Offices of Robert P. Bergman provides estate planning services to residents across Marin County, including San Anselmo, with a focus on personalized planning for trusts, wills and related documents. Our team works closely with clients to understand family dynamics, financial realities and long term goals, then tailors trust structures and funding strategies to meet those needs. We prioritize clear communication so clients understand the mechanics and implications of an ILIT, including trustee responsibilities, funding steps and coordination with existing retirement and life insurance arrangements to create a cohesive and manageable estate plan.
An ILIT is a separate irrevocable trust created to own life insurance policies and receive policy proceeds when the insured person dies. The trust is established by a grantor who transfers an existing policy or directs new coverage to be purchased in the name of the trust, and the trust is then managed by a trustee following terms set out in the trust document. Because the trust is irrevocable, the grantor generally gives up ownership control over the policy, which can produce estate planning advantages while requiring careful consideration of funding, gift tax implications and the timing of transfers to ensure the intended results under California and federal law.
Properly structuring and funding an ILIT requires attention to detail to avoid unintended tax or legal outcomes. Common issues include ensuring the trust owns the policy prior to the insured’s death for the proceeds to be excluded from the estate, coordinating annual gift contributions to fund policy premiums, and naming successor trustees and trust beneficiaries. The ILIT can be designed with flexible distribution provisions to address changing family circumstances, offer creditor protection for beneficiaries and designate how proceeds are used for long term needs, such as education, caregiving or business succession funding.
An Irrevocable Life Insurance Trust is a legal arrangement in which life insurance policies are owned by a trust rather than the insured individual, and the death benefit is paid to the trust for distribution according to the trust’s provisions. Because the trust owns the policy and the insured no longer has ownership rights, the insurance proceeds may be excluded from the insured’s estate for tax purposes, subject to timing and transfer rules. The trust document sets out who will manage the proceeds, how distributions are to be made, and any conditions or instructions for use of funds, providing a controlled, private mechanism for passing value to beneficiaries.
Creating an ILIT typically involves drafting the trust document with clear trustee powers and distribution terms, transferring or purchasing the life insurance policy in the trust’s name, and establishing a funding mechanism to cover ongoing premium payments. The grantor or other contributors often make annual gifts to trust beneficiaries or to the trust itself which the trustee uses to pay premiums, and those gifts can be structured to qualify for the annual gift tax exclusion when structured properly. Additional steps include selecting trustees and successor trustees, preparing related documents such as pour-over wills or trust certifications, and coordinating beneficiary designations on retirement accounts to ensure consistency across the estate plan.
Understanding the common terms used in estate planning and trust administration helps clients make informed decisions about establishing an ILIT. Key words include grantor, trustee, beneficiary, irrevocable, funding, premium payments, gift tax exclusion and pour-over will. Clear definitions reduce uncertainty and help you coordinate a trust with other estate documents such as a revocable living trust, powers of attorney and health care directives. This section offers straightforward explanations so San Anselmo residents can get a reliable overview of terminology they will encounter when setting up and managing a trust.
The grantor is the person who creates the trust and transfers property or directs that property be owned by the trust. In the case of an ILIT the grantor typically initiates the trust to own life insurance policies and takes steps to fund ongoing premium payments. Because the trust is irrevocable, the grantor gives up direct ownership of the policy, and this transfer must be carefully timed and documented to achieve the intended tax and estate planning outcomes under both California and federal rules. The trust document will reflect the grantor’s instructions for how proceeds are to be used and distributed after the insured person’s death.
The trustee manages the trust according to the terms in the trust document, which often includes investing trust assets, paying premiums, filing required reports and distributing proceeds to beneficiaries. Trustees must act in good faith, maintain accurate records and follow the grantor’s instructions while complying with applicable legal duties. For an ILIT the trustee oversees receipt of insurance proceeds, handles any tax or creditor issues related to distributions and coordinates with other advisors to ensure the trust is administered efficiently. Successor trustees are typically named to ensure continuity in management after the initial trustee is unable to serve.
Irrevocable ownership means the grantor cannot unilaterally revoke or change the trust terms after it is executed, and this feature is a primary reason ILITs can help remove life insurance proceeds from the taxable estate. Funding involves either transferring an existing life insurance policy into the trust or arranging for the purchase of a new policy owned by the trust. Funding also includes establishing a method for premium payment, which can involve annual gifts from the grantor to the trust or gifts to beneficiaries using gift tax exclusion techniques so the trustee can access funds to keep the policy in force.
A pour-over will is a will designed to transfer any assets not already titled in a trust into a previously established trust upon death. While an ILIT typically holds life insurance outside the estate, a pour-over will and other complementary documents such as powers of attorney, health care directives and trust certifications help create a comprehensive plan. These documents ensure decisions can be carried out if the grantor becomes incapacitated, and they assist in consolidating planning to minimize probate exposure and provide a clear path for the distribution of assets in accordance with the grantor’s overall intentions.
When considering an ILIT it is important to compare it with alternatives such as owning a policy personally, naming beneficiaries directly, or incorporating life insurance into a revocable living trust. Each option has different implications for estate inclusion, creditor access and administration. Owning a policy personally offers simpler control but may leave proceeds in the taxable estate. A revocable trust provides flexibility but does not always achieve the same estate exclusion benefits as an irrevocable trust. An ILIT requires giving up ownership and being comfortable with trustee management, but it can produce tax and protection advantages when used as part of a carefully coordinated plan.
For individuals with modest estates and straightforward beneficiary goals it may be reasonable to retain ownership of life insurance personally and use direct beneficiary designations rather than forming an ILIT. If your primary objective is to ensure immediate liquidity for surviving family members without complex distribution instructions or tax planning concerns, simpler arrangements can reduce administrative burden and legal costs. In these scenarios beneficiaries receive proceeds directly and can manage funds as they see fit, which is often a practical choice when there is no significant estate tax exposure and no need for trust-based controls or protection against future creditor claims.
If the primary concern is providing immediate cash for funeral expenses, short term bills or mortgage payoff, then direct beneficiary designations or a payable on death mechanism can provide quick access to funds without the formalities of an ILIT. These approaches minimize paperwork and can be effective when there is confidence that beneficiaries can responsibly manage a lump sum payment and there is no requirement for staged distributions or asset protections. For clients focused solely on immediate liquidity, simpler ownership and designation choices can often meet objectives with less ongoing administration and fewer legal formalities.
When family situations involve blended relationships, minor children, beneficiaries with special needs or concerns about creditor claims, a comprehensive trust-based plan including an ILIT can provide structured, long-term control over how proceeds are used. Trust provisions allow for staged distributions, protective provisions for a beneficiary’s creditors, and tailored instructions for educational or health-related support. This structure gives grantors greater assurance that assets will be used for intended purposes over time, while also setting clear trustee duties to follow the grantor’s directions and reduce the potential for disputes among heirs.
For clients facing potential estate tax exposure or who wish to shield proceeds from certain creditor or legal claims, combining an ILIT with other trust arrangements can create meaningful benefits. An ILIT can remove life insurance proceeds from estate calculations when properly executed and funded, which may reduce estate taxes and preserve more wealth for beneficiaries. Coordinating an ILIT with revocable trusts, retirement plan beneficiary designations and other protective measures helps ensure a unified strategy that addresses tax planning, distribution timing and preservation of family wealth for future generations.
A comprehensive planning approach that includes an ILIT alongside revocable trusts, wills and health directives provides a consistent framework for managing assets now and distributing them later. This method reduces uncertainty and delays that can occur when assets pass through probate, and it allows for tailored directions about the timing and conditions of distributions. Combining documents also supports continuity of decision-making during incapacity and after death, ensuring that financial and healthcare instructions are aligned with the grantor’s goals and that beneficiaries receive clear guidance about intended uses for life insurance proceeds and other trust assets.
Another important advantage of a comprehensive plan is the ability to coordinate tax planning with asset protection goals. By structuring ownership and beneficiary designations across different vehicles, grantors can reduce the risk that life insurance proceeds will be dragged back into the estate or become exposed to claims. Detailed planning also allows for naming trustees who will manage funds responsibly and for including provisions that address education, disability or other long-term needs. Altogether this reduces friction for families and helps preserve financial resources for the intended recipients.
Using an ILIT within a broader estate plan enables grantors to set precise instructions about how and when beneficiaries receive insurance proceeds, providing options for outright distributions, staggered payments or ongoing trust management. This control can be particularly valuable where beneficiaries may need management support or where funds should be preserved for long term needs. The trust document can define triggers for distributions, designate purposes such as education or healthcare and provide contingency plans if beneficiaries predecease the grantor, which together create a predictable framework that supports family priorities and financial stability across generations.
An ILIT can reduce the likelihood that life insurance proceeds are included in the taxable estate when properly established and funded well before the insured’s death, which may preserve more wealth for intended recipients. Additionally, because the trust owns the policy and distributes proceeds according to trust terms, beneficiaries may receive protections from certain creditor claims depending on the trust language and applicable law. While outcomes depend on individual circumstances and timing, integrating an ILIT with other protective measures in a comprehensive plan can offer greater peace of mind about the long term security of assets for family members.
Ensure that a reliable funding mechanism is in place to pay policy premiums once an ILIT is established, which commonly involves making annual gifts to the trust or to beneficiaries that enable the trustee to pay premiums. Planning for these contributions helps prevent lapses in coverage and avoids unintended tax consequences from transfers made too close to the insured’s death. It is important to document gifts and payments carefully and to coordinate with your insurer so the policy remains in force and aligned with the trust ownership, reducing the risk of administrative complications in the event of a claim.
An ILIT will be most effective when used in coordination with other estate planning documents such as a revocable living trust, pour-over will, financial powers of attorney and health care directives. Review beneficiary designations on retirement accounts and align them with trust distributions as appropriate to minimize conflicts and achieve cohesive results. Periodic plan reviews are also important to adapt to life changes such as marriage, divorce, births and changes in financial circumstances so the ILIT and related documents continue to reflect your goals and maintain efficient administration.
Individuals often consider an ILIT to remove life insurance proceeds from their taxable estate, provide structured distributions for heirs or protect proceeds from certain creditor claims. For clients with estate planning goals that include long-term family support, educational funding or business succession planning, an ILIT can serve as a targeted vehicle to meet those objectives while offering more control over distribution timing than direct beneficiary designations. The decision should be made with careful consideration of timing and funding strategies to ensure the trust performs as intended under California and federal tax rules.
An ILIT may also be appropriate when grantors want to create a durable plan that addresses potential family disputes, ensures provision for minor children or beneficiaries with special needs, or preserves liquidity to pay estate settlement expenses. The trust structure can be tailored to include provisions for discretionary distributions, creditor protection and successor trustee powers, which together support smoother administration and protect family interests. Working through the details in advance helps minimize the chances of post-death litigation or confusion and supports a more predictable transfer of wealth in line with the grantor’s intentions.
People commonly choose an ILIT when they have sizable life insurance policies, wish to minimize estate inclusion of policy proceeds, have blended families, or plan to provide long-term financial security for children or dependents. Other drivers include owning a business that requires liquidity for succession or buy-sell arrangements, concern about potential creditor exposure, or a desire to provide structured distributions for beneficiaries who may need oversight. Each circumstance requires tailored drafting and funding choices to align the trust’s provisions with the client’s objectives and to ensure the trust functions effectively when proceeds are payable.
Clients with substantial life insurance coverage often want to avoid having the death benefit counted as part of their taxable estate, particularly when other assets could push their estate into higher tax brackets. An ILIT can be drafted to hold insurance outside the estate, provided the transfer is handled with appropriate timing and documentation. This strategy helps preserve the value of the death benefit for intended beneficiaries, reduces the potential tax burden on heirs and ensures that funds are available to cover estate administration costs without forcing the sale of other assets.
When beneficiaries include minor children or individuals who may not be able to manage a lump sum, an ILIT can impose distribution schedules, reserve funds for education or health needs, and name trustees to manage distributions responsibly. These provisions limit the chance that funds will be dissipated quickly or diverted from intended purposes, while also allowing the grantor to define how support is to be provided over years or decades. Well drafted trust terms can include guidelines for timing of distributions, authority to cover special needs and directions for successor trustees when circumstances change.
Business owners who want to provide liquidity for buy-sell agreements, repay debts or ensure continuity after death may use life insurance held in an ILIT to fund those needs cleanly and predictably. An ILIT can support an orderly transfer of business interests by making funds available to heirs or business partners without pulling other assets into probate. This approach can preserve the value of the business, provide necessary working capital for transition, and reduce pressure to sell or liquidate assets to meet estate obligations, aligning business succession goals with personal planning objectives.
If you live in San Anselmo or nearby communities in Marin County and are thinking about an ILIT, the Law Offices of Robert P. Bergman can help you assess whether this trust fits into your broader estate plan. We listen to your circumstances, explain how an ILIT would work with your existing life insurance and asset structure, and outline the steps required to implement a trust that reflects your goals. Our approach emphasizes clear communication, practical drafting and coordination with other documents so you and your family have a reliable plan in place.
Our firm focuses on providing local, personalized estate planning services to residents of San Anselmo and broader Marin County, with attention to the legal and practical nuances of trusts, wills and related documents. We work with clients to craft ILITs that reflect family dynamics and financial circumstances, and we take time to explain funding strategies, trustee duties and related coordination needed to make a trust effective. The goal is to create a manageable plan that reduces uncertainty, supports beneficiaries and provides continuity in the administration of life insurance proceeds.
We assist with the full range of tasks involved in ILIT planning including drafting the trust document, transferring or arranging for policies to be owned by the trust, advising on premium funding and preparing related estate documents such as pour-over wills, powers of attorney and health care directives. Because each situation is unique, we design trust provisions and funding approaches tailored to specific family needs, business interests and tax planning objectives so clients have confidence that their intentions will be documented and carried out correctly over time.
Clients often appreciate our clear process for implementing an ILIT and for coordinating details with insurers, financial advisors and trustees. We provide practical guidance on timing of transfers, documentation required for policy assignment and steps to ensure premium payments are sustained. Our focus is on preventing common pitfalls such as untimely transfers that could cause inclusion in the estate and on making sure the trust’s administration instructions are realistic and enforceable, helping families achieve a smoother transition following the insured’s death.
Our process begins with a focused consultation to learn about your family, assets and objectives, followed by a review of existing policies and beneficiary designations. We then recommend how an ILIT would fit into your overall plan, draft customized trust documents, and coordinate with your insurance carrier to retitle policies or arrange new coverage. Finally, we assist with funding strategies for premium payments, prepare any complementary documents and review trustee selection and successor arrangements so the trust can be managed in accordance with your wishes long after the plan is in place.
Step one focuses on understanding your goals and reviewing documents such as life insurance policies, existing trusts, wills and retirement account beneficiary designations. This review identifies opportunities and potential conflicts that could affect whether an ILIT achieves the intended results, and it clarifies whether existing arrangements require retitling or other changes. During this phase we discuss funding options, timing concerns and trustee choices so you have a clear picture of the steps needed to implement a trust successfully.
We examine the current ownership and beneficiary designations of life insurance policies to determine whether transferring a policy into a trust is feasible and advisable. This assessment looks at any contestability periods, policy loans, cash values and insurer requirements for assignment, so the retitling process goes smoothly. Understanding the policy terms and the insurer’s rules helps avoid coverage lapses and ensures that the trust will own the policy under conditions that support the exclusion of proceeds from the taxable estate when appropriate.
A careful discussion about family relationships, beneficiary needs and long-term objectives allows us to draft trust provisions that reflect your wishes for distributions, trustee powers and special conditions. This conversation helps identify whether staged distributions, discretionary distributions or protective clauses are appropriate, and it directs the selection of trustees and successor fiduciaries. Clear articulation of these goals at the outset reduces ambiguity in the trust document and supports a plan that functions as intended for years to come.
After the initial review we prepare the trust document, coordinate the transfer or issuance of the policy in the trust’s name and advise on the funding mechanism for premium payments. This coordination can involve completing assignment forms with the insurer, arranging for premium gifts and setting procedures for recordkeeping. We also prepare any supporting documents such as a pour-over will and powers of attorney to align the ILIT with the rest of the estate plan and to ensure a seamless transition if incapacity or death occurs.
Execution includes signing the trust document in accordance with legal requirements and completing all insurer forms necessary to change policy ownership or beneficiary designations. It is important to document the transfer carefully and to confirm acceptance by the insurance company so coverage continues without interruption. We guide clients through the execution steps, provide checklists for necessary paperwork and verify that the trust is properly funded or that premium funding arrangements are in place to maintain the policy long term.
We help establish a reliable method for funding premiums, which may include annual gifts coordinated with the annual gift tax exclusion or other contribution strategies that suit the client’s financial circumstances. Proper recordkeeping of gifts, trustee disbursements and insurer communications is essential to maintaining trust integrity and to demonstrate the intended funding approach. Timely and accurate documentation also helps trustees manage the policy and respond effectively if questions about ownership or eligibility for estate exclusion arise after the insured’s death.
Once the trust is in place we advise on ongoing administration, including premium payment procedures, trustee reporting and periodic review of the plan to ensure it remains aligned with changing family or financial circumstances. Life events such as births, deaths, marriages or shifts in tax law may require updates to trust provisions or beneficiary designations, and periodic reviews help clients avoid unintended consequences. We provide guidance for successor trustee transitions and help address any legal or administrative matters that arise during the trust’s life so beneficiaries receive the intended benefits efficiently.
Annual maintenance includes confirming premium payments, reviewing trust investments if any, updating contact information for beneficiaries and trustees, and ensuring that all records are current. We provide trustee guidance about the legal duties to keep accurate records, communicate with beneficiaries and follow distribution instructions. Regular oversight prevents administrative surprises and helps preserve the intent of the trust, reducing the likelihood of disputes or lapses that could undermine the trust’s purpose over time.
As family situations and financial circumstances evolve, it may be necessary to update related estate planning documents so the ILIT continues to meet objectives. Changes such as the purchase of additional policies, divorce, remarriage or a beneficiary’s changed needs should prompt a review to determine whether trustee provisions, distribution terms or funding methods should be revised. While an ILIT itself is irrevocable, associated documents and funding strategies can be adjusted to respond to new realities, and we assist clients in navigating those updates thoughtfully and with attention to legal requirements.
An Irrevocable Life Insurance Trust is a trust established to own life insurance policies and receive proceeds when the insured person dies. By placing a policy in a trust and giving up direct ownership, the goal is often to keep the death benefit outside the taxable estate and to provide a structured mechanism for distributing funds to beneficiaries. The trust document names a trustee to manage the policy and distributions according to the grantor’s instructions, and it can include safeguards for creditor protection and staged payments to beneficiaries. Setting up an ILIT typically involves drafting the trust, transferring or purchasing a policy in the trust’s name and ensuring that premium funding is arranged. Timing matters: in many cases transfers made shortly before the insured’s death may still be included in the estate, so early planning and precise documentation are important. The trustee will handle claims and distributions after death, following the trust’s terms to achieve the grantor’s objectives.
An ILIT can help reduce the inclusion of life insurance proceeds in the taxable estate when the trust owns the policy and the insured no longer holds ownership rights. This outcome depends on proper timing of transfers and adherence to federal estate tax rules, which is why careful planning is required to achieve the desired tax treatment. For many clients with large life insurance proceeds or significant assets, an ILIT is a common tool used to separate insurance proceeds from estate calculations. However, an ILIT does not automatically eliminate all estate tax exposure and it must be coordinated with the client’s broader plan. The structure needs to align with beneficiary designations, retirement account planning and other transfers to maximize tax benefits. Consultation and deliberate timing of transfers help ensure that the trust functions as intended and that any potential tax advantages are preserved under current law.
Premiums for policies owned by an ILIT are typically funded through annual gifts from the grantor to the trust or directly to beneficiaries who then give the funds to the trustee, using the annual gift tax exclusion when appropriate. The trustee uses those contributions to pay premiums and maintain the policy in force, and careful recordkeeping is essential to demonstrate that gifts and premium payments were made in accordance with the plan. Proper documentation helps support the intended treatment of funds and the ongoing maintenance of coverage. Alternative funding strategies can include funding the trust with other assets to produce income for premium payments or coordinating contributions from family members. The chosen approach depends on the client’s financial situation and long-term goals, and the funding method should be designed to avoid lapses and to preserve the policy’s benefits for beneficiaries under the trust terms.
A trustee should be someone who is trustworthy, capable of managing fiduciary responsibilities and available to carry out the duties of the role over time. This can be a trusted family member, a close friend, a professional such as a bank trust department or a combination of co-trustees to balance personal knowledge with administrative reliability. The trustee must keep records, follow distribution instructions and coordinate with insurers and other advisors as needed. Naming successor trustees is also important so administration can continue if the initial trustee is unable or unwilling to serve. Consideration should be given to potential conflicts of interest, willingness to serve and the trustee’s ability to manage investments or consult with professionals. Clear instructions in the trust document about trustee powers and compensation help ensure smooth administration and reduce the risk of disputes.
It is often possible to transfer an existing life insurance policy into an ILIT, but the transfer must be executed carefully to avoid unintended consequences. Insurance companies have procedures for assigning ownership and the policy’s terms, cash value and any outstanding loans should be reviewed before transfer. Additionally, transfers made within a certain time period before the insured’s death may be treated differently for estate tax purposes, so timing and documentation matter. When transferring a policy, the trustee will typically be listed as the new owner and notifications to the carrier must be completed to formalize the change. We recommend reviewing any policy that is being considered for transfer to confirm it meets insurer requirements and to evaluate whether retitling or purchasing a new policy in the trust’s name is the better option based on premium costs and long term planning goals.
An ILIT generally functions separately from a revocable living trust because the ILIT is irrevocable and owns life insurance policies to potentially exclude proceeds from the taxable estate. A revocable living trust provides flexible management of owned assets and can be changed during the grantor’s life, but it does not offer the same estate exclusion benefits that an irrevocable arrangement can provide. Coordinating both instruments ensures beneficiary designations and distribution plans work together to meet overall planning objectives. Using both trusts may be appropriate when a client wants the day to day flexibility of a revocable trust for many assets while also keeping life insurance proceeds in an irrevocable vehicle for tax or protection reasons. Clear drafting and consistent beneficiary designations help prevent conflicts and ensure that each document complements the other to produce the desired outcome for the estate and beneficiaries.
If premium payments stop the policy owned by the ILIT could lapse or be reduced, which may negate the intended benefits of holding the policy in trust. The trustee is responsible for ensuring premiums are paid, but if funding arrangements are not in place or gifts to the trust are insufficient, the policy may lapse and beneficiaries could lose the planned death benefit. It is important to establish reliable funding mechanisms and to monitor premium requirements so coverage continues effectively. In cases where funding becomes problematic, options may include converting to paid up status if the policy allows, funding the premiums with trust assets if available, or exploring alternative insurance or funding strategies. Regular reviews and communication among grantors, trustees and advisors can prevent lapses and help maintain the policy according to the grantor’s intentions.
ILITs are not exclusively for large estates, but they may be less commonly used for small estates where the costs and administrative requirements outweigh the benefits. For smaller estates with limited life insurance and simple beneficiary arrangements, direct beneficiary designations or inclusion in a revocable trust may provide adequate results with less complexity. The decision depends on whether the potential protections and controls offered by an ILIT justify the added formality and irrevocability. However, even smaller estates can benefit from trust planning when there are specific distribution objectives, minor children or concerns about creditor claims. A discussion about costs, funding mechanics and family goals can clarify whether an ILIT is appropriate, and tailored options can be scaled to match the client’s priorities and financial realities in San Anselmo and Marin County.
The timeline for setting up an ILIT can vary, but typically the process includes an initial consultation, document drafting, execution of the trust and coordination with the insurer, which can take several weeks depending on the insurer’s requirements and the complexity of the funding plan. Transferring an existing policy may add time for insurer approvals and assignment processing, while purchasing a new policy may include underwriting timelines that extend the overall schedule. Early planning is advantageous because certain tax and estate benefits depend on timing of transfers relative to the insured’s death. Starting the process sooner rather than later allows adequate time to implement funding strategies, complete insurer paperwork and address any issues that arise in order to preserve the intended outcomes of the trust.
For an initial consultation bring copies of any existing life insurance policies, current beneficiary designation forms, copies of wills or trusts you have in place, recent financial statements and information about key family relationships. Providing details about your goals for the policy and how you wish benefits to be used will help us recommend whether an ILIT is appropriate and how it should be structured. The more documentation you provide, the more targeted and practical the initial assessment will be. Also be prepared to discuss potential trustees you may have in mind, your funding preferences for premium payments and any concerns you have about taxes, creditors or long term distributions. This information helps us create a plan tailored to your situation and ensures the documents drafted reflect your intentions for administering and distributing policy proceeds.
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