An Irrevocable Life Insurance Trust (ILIT) can be a powerful tool in a thoughtful estate plan for residents of Winton and surrounding Merced County. At the Law Offices of Robert P. Bergman, our approach emphasizes clear communication, careful planning, and tailored documents that align with each client’s financial and family goals. An ILIT can help manage life insurance proceeds, reduce potential estate tax exposure, and provide controlled distributions to beneficiaries. This guide explains how an ILIT functions, common documents associated with estate plans in California, and what to expect when you consider this option for your family’s future security.
Deciding whether an ILIT is appropriate involves looking at your overall estate plan, the types of assets you hold, and the needs of your beneficiaries. Many clients in Winton use ILITs alongside revocable living trusts, pour-over wills, advance health care directives, and powers of attorney to create a cohesive plan. The firm focuses on practical solutions: making sure ownership of life insurance is structured properly, trustee duties are clear, and funding and reporting are handled accurately. This introduction outlines the planning considerations and common benefits that families often weigh when discussing life insurance trusts in California.
An ILIT matters to families because it establishes a separate legal entity that owns life insurance policies outside of a grantor’s taxable estate, providing a layer of protection and potentially reducing estate-related costs. Beyond tax planning, an ILIT can set firm instructions for how policy proceeds should be used, directing funds to cover estate settlement expenses, support dependents, or preserve assets for future generations. For clients in Winton, an ILIT can also be coordinated with other estate planning documents like pour-over wills and financial powers of attorney so that insurance proceeds are managed in a predictable, legally sound way that reflects the grantor’s intent.
The Law Offices of Robert P. Bergman provide estate planning services for individuals and families throughout California, including Winton and Merced County. The firm focuses on developing clear, actionable estate plans that include documents such as revocable living trusts, last wills and testaments, and irrevocable trusts when appropriate. Clients appreciate the firm’s methodical approach to client interviews, document drafting, and implementation steps such as trust funding and beneficiary coordination. The goal is to deliver practical planning that reduces uncertainty for families and creates an orderly transition of assets according to each client’s wishes.
An Irrevocable Life Insurance Trust is a trust designed to own one or more life insurance policies, removing those policies and their death benefit from the grantor’s estate for estate planning purposes. When properly drafted and funded, an ILIT allows the trustee to receive policy proceeds upon the insured’s death and distribute them according to the grantor’s directions. Key considerations include who will serve as trustee, how premiums will be paid, whether policies will be transferred into the trust, and how distributions should be structured to meet beneficiaries’ needs such as liquidity for estate expenses, continuing support for family members, or funding for specific objectives.
Setting up an ILIT requires careful timing and compliance with applicable tax rules, particularly when transferring existing policies into the trust. New policy purchases or transfers of ownership must be documented and coordinated so that gifts to the trust and payment of premiums are handled correctly. The trustee’s administrative responsibilities include maintaining the trust records, paying premiums from trust funds or gifts, and managing distributions after the insured’s death. Coordination with other estate planning instruments, beneficiary designations, and retirement account planning helps ensure that the ILIT achieves the intended protections and distribution plan.
An ILIT is a legal arrangement created by a grantor who transfers ownership of life insurance policies to a trust that cannot be changed by the grantor once established. The trust’s terms dictate how the death benefit will be handled and distributed to beneficiaries. Because the grantor no longer owns the policy, proceeds paid by the insurer typically do not count toward the grantor’s probate estate, which can streamline asset transfer and provide liquidity for expenses. The trust is managed by a trustee who follows the grantor’s instructions, handles premium payments, and administers benefits to beneficiaries in a manner consistent with the trust document.
Core elements of an ILIT include the trust agreement, appointment of a trustee, naming of beneficiaries, and provisions for paying premiums and distributing proceeds. Administrative processes involve trust funding, which may be accomplished by gifts to the trust for premium payment or by transferring existing policies into the trust. The trustee has ongoing duties such as record keeping, tax filings when needed, and coordinating with insurers to ensure policies remain in force. Additional provisions may address successor trustees, conditions for distributions, and instructions for handling any disputes among beneficiaries to reduce the likelihood of litigation after the grantor’s death.
Understanding specific terms helps clients make informed decisions about ILITs. This section defines commonly used words and phrases in life insurance trust planning, providing plain-language explanations so you can better assess whether an ILIT fits your estate plan. Definitions cover ownership transfer, grantor, trustee, beneficiary, estate inclusion rules, and premium funding mechanisms. Familiarity with these terms helps clients prepare for meetings, ask focused questions, and follow through on implementation steps, such as changing policy ownership or arranging gifts for premium payments to ensure the trust is properly funded and maintained over time.
The grantor is the person who creates the trust and transfers the policy into it. The trustee is the individual or entity appointed to manage the trust according to its terms. The trustee’s duties include maintaining trust records, paying insurance premiums using trust funds or gifts, communicating with the insurer, and distributing benefits to named beneficiaries according to the grantor’s instructions. Good trustee selection considers trust administration skills, availability, neutrality, and ability to handle financial matters. Successor trustees should also be named to ensure continuity in the trust’s administration after the initial trustee can no longer serve.
Beneficiaries are the individuals or entities designated to receive trust assets, including insurance proceeds held in an ILIT. The trust document specifies primary and contingent beneficiaries, how distributions are made, and any conditions that must be met. Proper beneficiary designation requires coordination with beneficiary forms on insurance policies and other accounts to ensure the trust’s role is respected. Clear instructions reduce confusion and help ensure that proceeds are used as intended, whether for paying estate costs, providing ongoing support, or funding specific needs for children, grandchildren, or other family members.
Estate inclusion rules determine when life insurance proceeds are included in a deceased person’s taxable estate. One important consideration is the three-year rule, which may bring a policy into the estate if the insured transferred ownership to an ILIT within three years of death, depending on the circumstances. Understanding timing and how transfers are handled is essential when moving existing policies into a trust. Planning around these rules often involves structured gifting or policy replacements to avoid estate inclusion while still achieving the intended distribution and liquidity objectives for heirs.
Premium funding refers to how the trust will receive the money needed to pay insurance premiums. Common approaches include annual gifts to the trust from the grantor or third-party contributions. Depending on the size of the premium, annual exclusion gifts may be used to avoid gift tax, and a Crummey notice process may be implemented to permit beneficiaries to make withdrawal demands to qualify gifts for the annual exclusion. Proper documentation of contributions and notices is necessary to maintain the intended tax and estate planning benefits and to ensure the trust can sustain the policy obligations over time.
An ILIT is one of several tools available for managing life insurance and planning for estate liquidity. Other approaches include keeping a policy in one’s personal name, using a revocable living trust, or relying on beneficiary designations alone. Each option has trade-offs: personal ownership offers flexibility but may leave proceeds subject to estate inclusion, while a revocable trust may not remove proceeds from the taxable estate unless structured carefully. Comparing these options involves assessing estate size, tax exposure, the need for controlled distributions, and family dynamics to determine which approach best meets the client’s goals and provides stability for heirs.
For families whose estates are modest in size and unlikely to face significant estate tax liability, a simpler ownership strategy may be sufficient. Keeping a life insurance policy in the owner’s name and ensuring beneficiary designations are current can provide direct proceeds to loved ones without the complexity of trust formation and administration. This less formal approach can reduce legal costs and administrative burdens, but it may leave proceeds subject to probate or estate claims in certain circumstances. Evaluating family needs and potential creditor or tax exposure helps determine whether a limited approach is appropriate.
If the insured’s beneficiaries are few, relationships are straightforward, and the primary goal is to provide immediate liquidity to pay debts or funeral expenses, a straightforward policy ownership with beneficiary designations can meet those needs. This approach simplifies administration and ensures quick access to funds by named recipients. However, it does not allow for the same control over distributions, protections from potential beneficiary creditors, or estate tax planning benefits that an ILIT can provide. Choosing the simpler route requires confidence that direct distribution aligns with the insured’s long-term intentions.
When an estate includes significant assets, retirement accounts, or complex ownership arrangements, a comprehensive planning approach helps coordinate how life insurance interacts with the rest of the estate plan. Integrating an ILIT with revocable living trusts, pour-over wills, and beneficiary designations can reduce unintended estate inclusion and create a roadmap for distribution that minimizes disputes. Comprehensive planning addresses tax implications, funding strategies, and coordination between trustees and executors to ensure that insurance proceeds support the overall objectives without creating unnecessary administrative or tax burdens for beneficiaries.
A comprehensive plan helps protect vulnerable beneficiaries and manage long-term distribution needs by using trust provisions that limit access, set distribution milestones, or provide oversight through trustee direction. An ILIT can be drafted to support minors, individuals with special needs, or beneficiaries who may require assistance managing large sums. Along with documents such as special needs trusts, guardianship nominations, and durable powers of attorney, a broad plan reduces uncertainty and increases the likelihood that assets will be used as intended when the insured passes away.
A comprehensive approach to ILIT and estate planning can offer multiple benefits: streamlined administration, reduced exposure to estate inclusion, clarified duties for trustees and executors, and tailored distribution plans for beneficiaries. Coordinating life insurance within a broader estate plan provides liquidity to settle debts and taxes without forcing the sale of other assets, and it helps protect family members from immediate financial hardship following a death. Taking a holistic view ensures that life insurance complements the revocable trust, pour-over will, and other estate planning instruments to meet longer-term family goals.
In addition to tax and liquidity benefits, a coordinated plan reduces the risk of disputes by documenting intentions clearly and setting realistic mechanisms for dispute resolution and trustee accountability. This can make the administration process smoother and preserve family relationships during a difficult time. A comprehensive approach also allows clients to plan for contingencies, such as successor trustees, changes in family circumstances, and policy replacement strategies, so the plan remains effective and responsive to evolving needs over the years.
Using an ILIT as part of a broader estate plan can shield life insurance proceeds from probate and provide immediate liquidity to pay taxes, debts, and other settlement costs without disrupting family property. Properly structured, the trust holds proceeds for distribution according to specific instructions, preventing delays and reducing the likelihood that beneficiaries will need to sell other assets in distress. This protection ensures that funds are available when needed, and the trust provisions can be tailored to support ongoing financial needs such as education, housing, or long-term care expenses for surviving family members.
An ILIT allows the grantor to specify how and when proceeds are distributed, which can preserve funds for future generations and provide oversight for beneficiaries who may need assistance managing assets. Trust language can create staged distributions, lifetime income provisions, or conditions that support responsible use of funds. This level of control supports both immediate and long-term objectives, providing peace of mind that beneficiaries will receive financial support in a structured manner that aligns with the grantor’s values and intentions while preventing mismanagement or rapid depletion of proceeds.
When setting up an ILIT, make sure policy ownership and beneficiary designations are updated to reflect the trust as owner and beneficiary if appropriate. Coordination avoids conflicts between named beneficiaries on the policy form and trust provisions. It is also important to document transfers and communicate with the insurer about ownership changes. Clear, consistent paperwork helps prevent unintended estate inclusion and ensures that the trustee can access proceeds promptly according to the trust terms. Proper documentation also supports effective administration and reduces delays after the insured’s death.
Choose a trustee who is able to handle administrative responsibilities such as premium payments, record keeping, and communication with insurance companies, or consider a corporate trustee if preferred. The trustee should be someone who understands the importance of following the trust’s terms and coordinating with other estate planning professionals when necessary. Naming successor trustees and providing clear instructions in the trust document reduces the risk of administration lapses. Thoughtful trustee selection helps ensure that the trust serves its intended purpose for beneficiaries and that distributions are handled smoothly after the insured’s death.
People consider an ILIT for several reasons, including efficient transfer of life insurance proceeds outside of probate, potential estate tax planning benefits, and the ability to impose conditions on distributions to protect beneficiaries. An ILIT can provide liquidity to pay estate obligations, protect proceeds from creditor claims in some circumstances, and support long-term financial goals for heirs. When combined with other estate planning documents like revocable living trusts and powers of attorney, an ILIT contributes to a comprehensive plan that addresses both immediate post-death needs and ongoing family financial security.
Another reason to explore an ILIT is to control how proceeds are used, especially where beneficiaries may be minors, financially inexperienced, or have special needs. The trust structure allows for tailored distribution provisions, incentives, and oversight to help ensure funds are used responsibly. Considering an ILIT also encourages clients to review their overall planning, update beneficiary designations, and confirm that insurance policies align with the rest of the estate plan. These steps can reduce the likelihood of unintended outcomes and support an orderly transfer of assets according to one’s wishes.
Common circumstances that prompt consideration of an ILIT include large life insurance policies that could push an estate toward tax thresholds, the need for liquidity to settle an estate, ensuring structured payments to beneficiaries, caring for minor children, or providing for family members with ongoing support needs. Business owners may also use ILITs to provide continuity funding or facilitate buy-sell arrangements. Each circumstance requires an individualized review, considering tax rules, the timing of transfers, and how the ILIT will interact with existing estate planning documents and beneficiary arrangements.
When a life insurance policy has a significant death benefit relative to the size of the insured’s estate, transferring that policy to an ILIT can help remove proceeds from the taxable estate, subject to timing rules. This approach can reduce estate tax exposure while preserving liquidity for heirs. Planning should consider the three-year rule and other California and federal tax provisions. Implementing an ILIT in time and coordinating with tax professionals and financial advisors ensures that the arrangement achieves the desired estate planning results without unintended tax consequences.
Parents and grandparents often use ILITs to provide for minor children or dependents who may not be ready to receive a large sum outright. Trust provisions can create phased distributions, set education or housing conditions, and appoint trustees to manage funds responsibly until beneficiaries reach specified ages or milestones. This structure reduces the risk of imprudent use of funds and provides a framework for long-term support. Proper drafting ensures the trustee’s authority is clear and that payments align with the grantor’s priorities for the beneficiaries’ care and financial security.
An ILIT can help protect insurance proceeds from certain creditor claims and avoid probate-related exposure, depending on individual circumstances and trust terms. By holding proceeds in trust, the distribution process is governed by the trust document rather than probate court procedures, which can provide confidentiality and reduce the risk of contested distributions. While no arrangement guarantees complete protection in every situation, careful drafting and coordination with other planning tools can improve the likelihood that proceeds are preserved for intended beneficiaries rather than being subject to probate delays or creditor claims.
The Law Offices of Robert P. Bergman serve clients in Winton, Merced County, and across California with practical estate planning solutions, including irrevocable life insurance trusts and related documents. The firm assists clients in assessing whether an ILIT fits their overall plan, drafting trust agreements, coordinating transfers of policy ownership, and implementing funding strategies. Clients receive guidance on trustee selection, notice requirements for annual gifts, and steps to avoid unintended tax consequences. The goal is to create a durable plan that addresses both short-term needs and long-term family goals with clear instructions and thorough documentation.
Clients choose the firm for a methodical approach to estate planning that emphasizes clear communication and detailed implementation. The firm assists with drafting trust documents, coordinating policy ownership changes, and explaining funding strategies in plain language. By working closely with clients to understand family dynamics and financial goals, the firm creates documents that are practical and actionable. The process includes guidance on trustee duties, beneficiary notices for annual gifts, and ongoing steps to keep the plan current as circumstances evolve, ensuring the ILIT functions as intended when needed most.
The firm also focuses on coordinating the ILIT with other important estate planning components, such as revocable living trusts, pour-over wills, powers of attorney, and advance health care directives. This integrated approach reduces the chances of conflicting instructions and helps ensure that life insurance proceeds and other assets are distributed according to the grantor’s priorities. Clients receive clear instructions for documentation, funding, and communication among trustees, family members, and financial institutions to streamline administration and reduce the likelihood of disputes.
Practical support extends beyond document preparation to implementation steps such as working with insurance carriers on ownership transfers, preparing beneficiary notices for annual gifts when appropriate, and advising on trustee selection and successor arrangements. The firm helps clients anticipate potential challenges and provides a roadmap for maintaining the ILIT over time. This comprehensive assistance aims to give clients confidence that their plan will provide financial stability and a well-ordered distribution of assets consistent with their wishes.
The process begins with a careful intake to understand your objectives, assets, family relationships, and existing estate documents. We then review life insurance policies, recommend whether a new policy or a transfer into a trust is appropriate, and outline premium funding options. Once the trust language is drafted, we review trustee duties and successor provisions, assist with necessary notices and transfers, and coordinate with other advisors. The final steps include executing documents, updating beneficiary designations, and providing guidance on ongoing maintenance to ensure the trust operates as intended over the years.
During the initial consultation, we gather information about your family, assets, insurance policies, and planning goals. This assessment helps determine whether an ILIT aligns with your broader estate plan and which complementary documents you may need, such as a revocable living trust, pour-over will, or powers of attorney. We also discuss trustee selection, potential funding mechanisms for premiums, and timing considerations like the three-year rule. Clear upfront information allows us to propose a practical plan that balances simplicity and long-term protection tailored to your circumstances.
A thorough document review and asset inventory identifies existing policies, beneficiary designations, and accounts that might interact with an ILIT. We confirm ownership, policy terms, beneficiary forms, and any employer-provided coverage to determine the best path forward. This step also uncovers potential conflicts or gaps in documentation that could affect implementation. Creating a comprehensive inventory ensures that ownership transfers, funding arrangements, and trust terms are aligned, reducing the risk of unintended consequences after the trust is established.
We discuss available premium funding strategies, including annual gifts to the trust and possible use of existing assets. Choosing how premiums will be paid and whether beneficiaries require notices are important decisions. We also review trustee options—individuals, family members, or corporate trustees—and consider successor trustee arrangements. These choices affect administration and long-term management of the trust, so we provide guidance to help clients select solutions that match their preferences for oversight, cost, and continuity.
After the assessment, we prepare a draft ILIT tailored to your goals, specifying trustee powers, distribution terms, and funding procedures. The draft is reviewed with you and revised as needed to reflect your precise intentions. Execution involves signing the trust document and any related instruments, then completing transfers of policy ownership or purchasing new policies as necessary. We ensure that all documentation is properly executed to support the intended estate planning results and provide instructions for notifying beneficiaries and the insurer where appropriate.
Coordinating policy transfers to the trust requires interaction with the insurance company to complete required forms and confirm the trust is properly recorded as owner and beneficiary when applicable. We assist in completing transfer paperwork and confirming any required consents or assignments. Proper coordination prevents gaps in coverage and supports the trust’s intended role. Documentation of these transfers, including dates and correspondence, is maintained so trustees have a clear record of ownership and the provenance of policy assets.
We also prepare or update complementary documents such as pour-over wills, financial powers of attorney, advance health care directives, and guardianship nominations to ensure the ILIT integrates into the full estate plan. These instruments provide backup mechanisms for asset transfer and decision-making in the event of incapacity or death. Coordinated document execution reduces the chance of inconsistent instructions and simplifies administration by creating a unified plan for how assets and responsibilities should be handled when life circumstances change.
After documents are signed and ownership is transferred, the ongoing work includes funding the trust for premium payments, sending required notices to beneficiaries for annual gifts when applicable, and maintaining records. We advise on procedures for annual contributions and provide templates for notices to support compliance with gift exclusion rules. Periodic reviews ensure the ILIT remains aligned with changes in policy terms, family circumstances, and tax rules. Ongoing maintenance helps preserve the trust’s benefits and prevents lapses that might undermine the estate planning objectives.
Trustees must maintain accurate records of premium payments, contributions to the trust, communications with the insurer, and distributions. We provide guidance and templates to help trustees keep comprehensive records and comply with any reporting obligations. Clear recordkeeping simplifies administration and supports the trustee’s ability to act in accordance with the trust terms. This documentation also assists family members and financial institutions by creating a transparent history of how the trust was funded and managed over time.
Life changes such as marriage, divorce, birth of children, or financial events may require updates to the ILIT or related estate documents. We recommend periodic reviews to confirm that the trust remains appropriate and that funding strategies continue to work. Reviews may include revisiting trustee selection, beneficiary designations, and coverage levels to ensure the plan delivers the intended results. Proactive updates reduce the risk of unexpected outcomes and keep the estate plan aligned with the client’s evolving priorities.
An Irrevocable Life Insurance Trust is a trust created to own life insurance policies so that policy proceeds are handled and distributed according to the trust’s terms rather than through probate. The grantor transfers ownership of an insurance policy to the trust and names the trust as the beneficiary; because the grantor no longer owns the policy, proceeds are typically outside the probate estate, providing liquidity for heirs and structured distributions. An ILIT is often considered by individuals who wish to control distributions, protect benefits from probate, and coordinate insurance with their broader estate plan. Deciding to create an ILIT depends on personal goals, family circumstances, and the size and composition of your estate. If your primary concerns are estate liquidity, controlled distributions for beneficiaries, or potential estate tax exposure, an ILIT could be beneficial. A legal professional can evaluate your policies, advise on timing and funding strategies, and draft trust provisions that reflect your intentions while coordinating with other estate planning documents for a cohesive plan.
Transferring ownership of a life insurance policy to an ILIT can remove the policy’s death benefit from the grantor’s taxable estate if the transfer is completed well before death and otherwise conforms with applicable rules. The timing of a transfer is important, because transfers made within three years of the insured’s death may be subject to estate inclusion rules, depending on federal tax law. For most clients, planning the transfer well in advance and documenting the transaction helps preserve potential tax benefits and avoids unintended inclusion in the estate. California does not impose a separate estate tax for most estates, but federal estate tax rules may apply depending on the size of the taxable estate. Coordinating with financial advisors and reviewing the full asset picture helps determine whether an ILIT would provide meaningful tax advantages. The trust should be structured carefully and implemented with appropriate funding and notices to support the intended tax outcome.
Yes, you can transfer an existing life insurance policy into an ILIT, but timing and documentation are important to avoid estate inclusion. Transfers made within three years of death may be treated as part of the grantor’s estate under federal rules in certain situations. When transferring a policy, the insurer’s paperwork must be completed properly to reflect the trust as the owner, and all relevant consents or assignments should be documented. If the policy has a loan or other encumbrance, that will also need to be addressed during the transfer process. In some cases, purchasing a new policy owned by the trust may be preferable to transferring an existing policy. Each option has advantages and drawbacks related to underwriting, medical qualification, and potential tax treatment. A careful review of policy terms, timing considerations, and funding mechanisms helps determine the best path for your circumstances and minimizes the risk of adverse tax consequences.
Premiums for policies owned by an ILIT are typically paid from funds contributed to the trust. Common practices include the grantor making annual gifts to the trust specifically for premiums, which the trustee then uses to pay the insurer. Depending on the size of the contribution, the annual gift tax exclusion may apply, and a notice procedure can be used to qualify gifts for the exclusion. Proper recordkeeping of contributions and premium payments is essential to maintain the intended benefits of the arrangement. Other funding options include larger lump-sum gifts or transferring assets to the trust to generate income for premiums. The trustee must manage trust funds prudently and document each payment. Planning the funding approach during trust setup reduces the likelihood of unintended policy lapses and helps maintain coverage in a way that aligns with the grantor’s estate planning objectives.
Selecting a trustee for an ILIT requires balancing trust administration skills with trustworthiness and availability. Many clients choose a trusted family member, a close friend, or a corporate trustee depending on the complexity of the trust, expected administration duties, and family dynamics. Consider whether the trustee can handle tasks such as paying premiums, keeping accurate records, communicating with the insurer, and following the trust terms. Naming successor trustees provides continuity in case the primary trustee can no longer serve. When deciding on a trustee, consider potential conflicts of interest and the ability to work with other advisors. Professional or corporate trustees may offer continuity and administrative resources but can involve additional costs. The choice should reflect the grantor’s comfort level with oversight, desired level of hands-on management, and the need for impartial administration to ensure the trust operates smoothly over time.
When an ILIT is properly structured and the insured dies, the insurance proceeds are paid to the trust and then administered according to the trust’s terms. The trustee is responsible for receiving the proceeds, paying any relevant expenses, and distributing funds to beneficiaries as directed. Because the funds are handled by the trust, the distribution process can avoid probate and follow the specific distribution plan set out by the grantor, such as staged payments or designated purposes like education or healthcare. Trust administration includes recordkeeping, possible tax filings, and coordinating with beneficiaries to effect distributions. The trustee must follow the trust instructions and act in the beneficiaries’ best interests as outlined in the trust document. Clear trust provisions reduce ambiguity and help ensure that proceeds are used in a manner consistent with the grantor’s intent while providing the family with guidance and structure during a transition period.
In many ILIT arrangements, beneficiaries receive notices when the grantor makes gifts to the trust that may be subject to the annual gift tax exclusion. Known as Crummey notices in typical practice, these communications inform beneficiaries of their temporary right to withdraw a portion of a gift, helping the gift qualify for the annual exclusion. While notice procedures vary based on the trust design, consistent documentation and timely notices support compliance with tax rules and strengthen the trust’s intended benefits. Even when notices are not required, beneficiaries should be informed about the trust’s purpose and administration requirements so they understand potential future distributions. Transparent communication reduces surprises and may reduce the likelihood of disputes. Working with legal counsel to follow appropriate notice practices and preserve the intended tax advantages is a prudent part of trust administration.
An ILIT is typically one component of a broader estate plan that may include a revocable living trust, pour-over will, powers of attorney, and healthcare directives. The ILIT’s role is focused on holding life insurance policies and managing proceeds according to the trust’s terms, while a revocable living trust often serves as the primary vehicle for distributing other assets and avoiding probate. Coordination ensures that beneficiary designations and trust instructions do not conflict and that assets flow as intended upon incapacity or death. To achieve a cohesive estate plan, we review all documents concurrently and recommend updates where necessary. For example, a pour-over will can transfer overlooked assets to a revocable trust at death, while powers of attorney and advance directives handle incapacity. Ensuring these instruments work together reduces administrative complexity and helps ensure that an ILIT supports, rather than undermines, the broader plan.
Maintaining an ILIT may involve ongoing administrative costs such as trustee compensation if a professional trustee is used, recordkeeping expenses, and routine tax or legal consultations. Insurance premiums are a principal ongoing cost and must be funded according to the trust’s plan, which may require annual contributions from the grantor. While these costs exist, they are often weighed against the potential benefits of probate avoidance, controlled distributions, and estate planning advantages that an ILIT can provide. Periodic reviews and updates to the trust and related documents may also generate professional fees, but staying current with changes in family circumstances or tax law helps preserve the trust’s effectiveness over time. Clients should discuss anticipated administrative needs and costs with counsel when setting up the trust to ensure the plan remains sustainable and practical for trustees and beneficiaries.
It is prudent to review your ILIT and overall estate plan periodically, typically every few years or when significant life events occur such as marriage, divorce, births, deaths, major changes in assets, or changes in tax law. Regular reviews ensure that insurance coverage, beneficiary designations, trustee selections, and funding strategies remain aligned with your goals. Periodic check-ins also allow for administrative updates, such as replacing trustees or updating notices, to preserve the intended benefits of the trust. Proactive reviews help prevent issues like unintended estate inclusion, lapses in coverage, or outdated instructions that no longer reflect family priorities. Working with counsel to schedule routine plan reviews ensures the ILIT continues to function as planned and that the entire estate plan evolves as needed to meet new circumstances and maintain clarity for trustees and beneficiaries.
Criminal Defense
Homicide Defense
Manslaughter
Assault and Battery
Assault with a Deadly Weapon
Battery Causing Great Bodily Injury
Domestic Violence
Domestic Violence Protection Orders
Domestic Violence Restraining Order
Arson Defense
Weapons Charges
Illegal Firearm Possessions
Civil Harassment
Civil Harassment Restraining Orders
School Violence Restraining Orders
Violent Crimes Defense
Estate Planning Practice Areas