An Irrevocable Life Insurance Trust (ILIT) can be an important estate planning tool for individuals in Brea who wish to manage life insurance proceeds outside their taxable estate. At the Law Offices of Robert P. Bergman, we help clients understand how an ILIT works, how it interacts with other estate planning documents such as revocable living trusts and pour-over wills, and what steps are required to fund and maintain the trust. This overview explains benefits, typical uses, and practical considerations so you can determine whether an ILIT fits within your broader estate plan while keeping family goals and tax implications in view.
Creating and funding an ILIT requires careful planning and precise documentation. An ILIT is designed to hold ownership of a life insurance policy, and because the trust is irrevocable, it removes the policy’s death benefit from your taxable estate under many circumstances. Brea residents considering an ILIT should review beneficiary designations, trustee selection, trust terms, and trust administration procedures to ensure the policy operates as intended. This section explains the trust lifecycle, common funding methods, and coordination with powers of attorney, advanced health care directives, and other estate planning instruments used by households in Orange County.
An ILIT offers distinct benefits when included in a comprehensive estate plan. By transferring ownership of a life insurance policy to an irrevocable trust, policy proceeds may be excluded from your personal taxable estate, which can reduce estate tax exposure and preserve wealth for heirs. Beyond tax considerations, an ILIT can protect proceeds from creditor claims, provide structured distributions to beneficiaries, and control how life insurance funds are used after your death. For families with specific liquidity needs, an ILIT can provide immediate funds to pay estate taxes or other obligations while keeping assets aligned with long-term family objectives and trust directives.
The Law Offices of Robert P. Bergman serves clients in Brea and throughout California with estate planning services tailored to families, business owners, and retirees. Our firm focuses on clear communication and practical planning steps, helping clients draft documents such as revocable living trusts, pour-over wills, powers of attorney, health care directives, and trusts including ILITs and special needs trusts. We guide clients through decision points like trustee designation, funding methods, and beneficiary structure, always emphasizing documentation that aligns with California laws and individual family goals. Call 408-528-2827 to discuss how an ILIT might fit your plan.
An ILIT is a formal trust created to own a life insurance policy and to receive the policy proceeds at death according to the trust terms. Once established and funded, the trust removes the insured’s direct control over the policy, which is a key feature enabling potential estate tax advantages. The trust document names a trustee who will manage the policy and distribute proceeds to beneficiaries under set instructions. Setting up an ILIT requires coordination with the insurance carrier to change ownership and beneficiary designations, and ongoing administration to ensure premiums are paid and trust formalities are observed.
Proper funding and administration of an ILIT are essential to achieve intended results. Funding typically involves transferring an existing policy into the trust or having the trust purchase a new policy. When transferring an existing policy, timing matters because transfers made within three years of death may not remove the proceeds from the taxable estate under federal rules. Administration involves trustee duties such as premium payments, recordkeeping, and delivering trust assets to beneficiaries on the terms specified. Regular reviews are important to account for changes in family circumstances, tax law, or policy performance.
An Irrevocable Life Insurance Trust is a trust agreement designed specifically to own and control life insurance policies outside of an individual’s personal estate. By making the trust the policy owner and beneficiary, the insured removes direct ownership and management, which can offer estate tax planning benefits and structured distributions to intended recipients. The trust’s terms govern how proceeds are invested and allocated, and they can include provisions for liquidity for probate costs, care for dependents, or long-term needs such as education. A trustee manages the policy and ensures compliance with the trust terms and applicable legal requirements.
Establishing an ILIT involves several practical steps including drafting the trust document, appointing a trustee and successor trustees, transferring or purchasing a policy under the trust, and setting premium funding arrangements. The trust should include clear distribution terms, provisions for trustee powers, and instructions for handling policy loans or changes. Grantors often use annual gifts to the trust to cover premium payments, and those gifts may require completed gift tax filings depending on amounts. Careful coordination with your life insurance carrier and timely execution of ownership changes are necessary to achieve the intended estate planning outcome.
This glossary explains important terms used in ILIT planning so clients can make informed decisions. Definitions include grantor, trustee, beneficiary, funding, transfer, gift tax considerations, and the three-year rule affecting transfers before death. Understanding these concepts helps you evaluate how an ILIT interacts with other estate plan components like revocable trusts, pour-over wills, and powers of attorney. Familiarity with these terms supports conversations about trustee responsibilities, premium funding strategies, and how to structure distributions to meet family goals while complying with federal and state rules that affect estates in California.
The grantor is the person who creates the trust and typically transfers ownership of a life insurance policy into the trust. The grantor sets the initial terms and may make ongoing contributions to the trust to fund premiums. Because an ILIT is irrevocable, the grantor gives up direct control over the policy once it is transferred. Understanding the grantor role clarifies the distinction between the person who established the trust and the trustee who manages it, and it highlights how the grantor’s estate is treated for tax purposes when ownership is properly transferred.
The trustee is the individual or entity charged with administering the trust, including paying premiums, maintaining records, and distributing proceeds according to the trust terms. Trustee duties include coordinating with the insurance carrier, ensuring proper funding for premiums, and following the grantor’s instructions for eventual distributions. Choosing a trustee involves evaluating trustworthiness, availability, and administrative ability. Successor trustee provisions are important to provide continuity if the named trustee cannot serve, and trustees must act in accordance with the trust document and applicable fiduciary rules under California law.
A beneficiary is a person or entity designated to receive trust assets, including insurance proceeds, under the ILIT’s terms. Beneficiary designations within the trust document determine how funds are distributed, whether in lump sums, staged payments, or conditional distributions for education, health care, or other specified needs. Properly naming the trust as the policy beneficiary ensures proceeds are paid into the trust rather than directly to heirs, which allows the trustee to manage and protect assets according to the grantor’s objectives and to help preserve family wealth across generations.
Funding an ILIT involves transferring ownership of an existing life insurance policy into the trust or arranging for the trust to purchase a new policy and pay premiums. A common funding method is for the grantor to make annual gifts to the trust to cover premium payments, often using gift tax exclusions. Timing is important because transfers made within a specified federal period before death may be included in the grantor’s estate. Proper funding documentation, insurance assignment forms, and coordination with financial advisors help ensure the ILIT functions as intended.
An ILIT should be considered alongside other estate planning tools such as revocable living trusts, wills, and beneficiary designations. Unlike revocable trusts, ILITs are irrevocable and designed to remove life insurance proceeds from your estate for tax and creditor considerations. A pour-over will complements trust-based plans by directing assets to a revocable trust at probate, while powers of attorney and health care directives handle personal decisions during incapacity. Choosing the right mix of instruments depends on your goals for control, tax planning, and family protection, and many individuals combine tools to craft a coherent estate plan.
For some households, a limited approach such as retaining a policy with direct beneficiaries or using a revocable trust may be adequate when estate tax exposure is unlikely. If the total estate value falls well below federal and state estate tax thresholds and liquidity needs are modest, owners sometimes prefer simpler arrangements that maintain flexibility and control. In these situations, fewer formal steps are required and administration is simpler. However, it is still important to review beneficiary designations and coordinate insurance ownership with overall estate documents to avoid unintended consequences or probate delays.
When life insurance serves a short-term purpose, such as covering a mortgage during early retirement years or bridging a temporary liquidity need, a limited approach may be preferable. Temporary ownership arrangements or beneficiary adjustments can address immediate objectives without committing to an irrevocable structure. Those considering short-term arrangements should weigh the trade-offs between flexibility and the potential benefits of a trust, especially if family circumstances or tax situations may change. Regular reviews ensure that any short-term strategy remains aligned with evolving goals and obligations.
A comprehensive approach that includes an ILIT can protect life insurance proceeds from estate inclusion, reduce tax exposure, and provide structured distributions that meet long-term family objectives. For households with substantial assets or complex family dynamics, an ILIT offers predictable outcomes by delegating management to a trustee and setting clear distribution rules. This structure supports long-range planning for education, care of dependents, or intergenerational wealth transfer while aligning with other trust arrangements and asset protection goals under California law.
When beneficiary protection and creditor risk are concerns, an ILIT can shelter life insurance proceeds from certain claims and impose distribution controls that protect vulnerable recipients. This is often relevant for beneficiaries who might face financial instability, creditor activity, or unique dependency needs. A trust structure allows grantors to tailor distribution timing, allocate funds for specific purposes, and set conditions that reflect family priorities. Properly drafted trust provisions and trustee instructions increase the likelihood that proceeds support intended beneficiaries according to the grantor’s directions.
Integrating an ILIT with a broader estate plan provides coordinated benefits such as estate tax consideration, liquidity for settling affairs, and defined distributions that follow the grantor’s wishes. An ILIT can protect life insurance proceeds from being inadvertently distributed or used in ways that conflict with long-term goals. When combined with revocable trusts, powers of attorney, and healthcare directives, an ILIT becomes one component of a cohesive plan that addresses incapacity, inheritance, and administration after death. The result is a more predictable and managed transition of assets to family members.
Additionally, a comprehensive approach helps reduce administrative friction and potential disputes among heirs by centralizing instructions under a trust document. Trustees can follow clear terms for distributing proceeds, handling creditor claims, and conserving assets for intended uses. Coordinated planning also allows for tax planning strategies and funding mechanisms that minimize surprises. Regular review and upkeep of documents keep the plan current and aligned with changes in family circumstances, life insurance performance, and the regulatory environment affecting estates in California.
One main advantage of incorporating an ILIT is its ability to provide liquidity to cover tax obligations or settlement costs without forcing the sale of other estate assets. When ownership and beneficiary designations are properly established, life insurance proceeds can be available to pay estate settlement expenses and avoid disruption to family-owned businesses or real property holdings. This planning preserves asset continuity for heirs and enables smoother administration during often stressful times following a death, while respecting the grantor’s objectives for distribution and preservation of family assets.
An ILIT can offer privacy and control because trust administration generally occurs outside of probate and according to private trust terms rather than public court filings. Trustees distribute proceeds under the trust’s instructions, which can limit direct access by beneficiaries until conditions are met. This discretion can reduce family disputes and provide oversight for funds intended for minor children, adults with limited financial experience, or those with special needs. Structured distributions allow grantors to align proceeds with long-term caregiving and financial planning objectives while maintaining confidentiality.
Before transferring a policy into an ILIT, confirm current ownership and beneficiary designations with your insurance carrier to prevent unintended outcomes. Documentation should reflect the trust as owner and beneficiary where appropriate, and all forms must be completed according to carrier requirements. Mistakes in naming conventions or timing can cause proceeds to be payable outside the trust or to be included in your estate. Clear recordkeeping and coordination with the carrier reduce the risk of administrative problems and ensure that the trust functions as intended upon the insured’s death.
Selecting a trustee who will maintain accurate records and follow trust instructions is essential for long-term administration. Trustee responsibilities include paying premiums, tracking gift transfers, filing necessary tax forms, and communicating with beneficiaries. Even if a family member serves as trustee, consider involving a professional fiduciary or advisor for administrative support to reduce errors and disputes. Proper trustee selection and oversight help ensure continuity, impartial handling of trust assets, and faithful implementation of the grantor’s distribution intentions over time.
Individuals consider an ILIT when they want to remove life insurance proceeds from their estate, provide structured distributions to heirs, and reduce the risk that proceeds will be subject to estate taxes or certain creditor claims. For clients with sizeable life insurance policies, family-owned businesses, or real property, an ILIT can supply liquidity to settle affairs while preserving other assets. The choice to establish an ILIT often follows careful review of asset values, family goals for protection and distribution, and coordination with other estate planning documents to ensure cohesive implementation under California law.
Another common reason to use an ILIT is to provide for beneficiaries who may need ongoing oversight or protection from outside claims. Trust terms can be drafted to provide staged distributions, educational funding, or support for dependents with special needs without exposing funds directly to personal creditors. This approach protects the intended purpose of life insurance proceeds while allowing trustees to manage distributions for long-term benefit. Regular plan reviews ensure that the ILIT continues to align with changes in family needs, policy performance, and tax considerations.
Many clients explore ILITs when they face potential estate tax obligations, need to provide liquidity for estate settlement, or wish to protect insurance proceeds from creditors or remarriage complications. An ILIT may be suitable for business owners seeking continuity funding, parents planning for minor children, or those who want controlled distributions to beneficiaries. Each circumstance requires tailored drafting and funding strategies to ensure the trust accomplishes its objectives while complying with federal and state rules that affect estate inclusion and tax reporting.
When estate values approach levels that might trigger federal estate tax considerations or when heirs would face liquidity shortfalls to settle the estate, an ILIT can provide liquid funds for tax payments and settlement costs. This helps avoid forced sales of business interests or real estate at inopportune times. By housing life insurance proceeds outside the grantor’s taxable estate, an ILIT can ease transitional financial demands and preserve other estate assets for the intended heirs while enabling orderly administration.
Families with beneficiaries who have limited financial experience, ongoing care needs, or exposure to creditor claims often use ILITs to protect proceeds and provide structured support. Trust terms can limit direct payouts, require trustee oversight, and allocate funds for specific uses such as health care or education. This approach reduces the risk that proceeds will be dissipated or subject to third-party claims and helps ensure funds are used in ways that serve the grantor’s intentions over an extended period.
Business owners may use an ILIT to fund buy-sell agreements, provide liquidity for succession planning, or secure funds that support business continuity after the owner’s death. Life insurance proceeds placed in an ILIT can be allocated according to trust terms to compensate buying partners, repay business debts, or support managerial transitions. Coordinating trust planning with business agreements and ownership documents ensures that proceeds help maintain business stability and align with the owner’s succession objectives without unexpected estate complications.
The Law Offices of Robert P. Bergman provides local guidance for residents of Brea and surrounding areas seeking to integrate an ILIT into their estate plans. We assist with drafting trust documents, coordinating policy transfers, and outlining premium funding strategies that align with family objectives. Our approach emphasizes clear communication about trustee duties, timing considerations like the federal three-year rule, and coordination with other estate documents such as revocable trusts and pour-over wills. Local clients receive personalized attention to help implement practical solutions that meet their planning needs.
Clients choose the Law Offices of Robert P. Bergman because we focus on careful documentation, clear processes, and tailored trust provisions that reflect family goals and California law. We walk through options for funding a trust, trustee selection, and beneficiary structuring so each client understands the implications of an ILIT. Our goal is to craft durable documents that reduce administrative burden and promote orderly transfer of life insurance proceeds to intended recipients while coordinating with other planning tools such as powers of attorney and advanced health care directives.
We emphasize proactive planning to avoid common pitfalls such as incorrect policy ownership, misaligned beneficiary designations, or insufficient funding for premium payments. Our firm helps clients maintain records, coordinate with insurance carriers, and prepare the trust for long-term administration. Regular reviews and updates account for life changes such as marriage, birth, or changes in asset values, ensuring the ILIT continues to accomplish the client’s goals under changing circumstances and remains compatible with the broader estate plan.
Accessibility and local knowledge are priorities when working with clients in Orange County. We provide straightforward explanations of the legal and administrative steps required to form and maintain an ILIT, and we collaborate with financial advisors and insurance agents when necessary. Our objective is to help clients achieve predictable outcomes for life insurance proceeds, supporting both tax and family protection goals while keeping the process as efficient and transparent as possible for the grantor and named beneficiaries.
Our process begins with an initial consultation to review estate goals, existing policies, and family circumstances. We evaluate whether an ILIT is appropriate, discuss funding strategies, and outline trustee responsibilities. If the client proceeds, we draft the trust agreement, coordinate the transfer or purchase of the life insurance policy, and provide guidance on premium funding and recordkeeping. Post-formation, we offer ongoing review and administration support to ensure the trust remains aligned with the client’s objectives and updated for changes in law or family status.
During the initial review, we gather information about existing insurance policies, asset values, family goals, and any relevant business interests. This assessment identifies whether transferring a policy into an ILIT or having the trust purchase a new policy best suits the client’s needs. We explain timing considerations such as transfer rules that can affect estate inclusion, and we outline funding options for premiums. Clear planning at this stage reduces the likelihood of administrative errors and sets the foundation for a successful trust implementation.
We review current estate planning documents, beneficiary designations, and insurance contracts to ensure all pieces fit together. This inventory helps identify inconsistencies or items that require modification, such as changing policy ownership to the trust. A thorough document review also highlights the need to update related instruments like powers of attorney or pour-over wills so the overall plan is cohesive. Accurate records and clear alignment among documents minimize future disputes and administrative burdens for trustees and beneficiaries.
We discuss options for funding the trust, including annual gifts to cover premiums and techniques to manage gift tax reporting when appropriate. This conversation covers the mechanics of making gifts to the trust, using exclusions, and documenting payments so trustees can demonstrate premium funding. Clients receive guidance on coordinating with insurance agents and financial advisors to ensure premium payments are timely and properly documented, which helps preserve the intended estate planning benefits of the ILIT.
Once planning decisions are made, we prepare the trust document, transfer paperwork, and any associated amendments to estate planning instruments. The trust document sets trustee powers, distribution terms, and administrative instructions tailored to the client’s wishes. Execution includes signing the trust, completing insurance assignment forms, and confirming with the carrier that ownership and beneficiary designations reflect the trust. Proper execution and immediate follow-up minimize confusion and establish a clear record showing that the trust owns the policy.
Drafting the trust agreement focuses on clarity in trustee authority, distribution timing, and conditions for beneficiaries. We include provisions addressing premium funding, successor trustee appointment, and procedures for handling policy loans or changes. The trust language is tailored to fit the client’s goals, whether to provide staged distributions, support for dependents, or preservation of funds against claims. Clear drafting reduces ambiguity and supports enforceability under relevant trust and estate laws in California.
Execution includes completing carrier forms to transfer ownership and update beneficiary designations to the ILIT, along with any required notarizations or trust certifications. We coordinate closely with your insurance agent to confirm receipt and processing of transfer requests and to ensure the policy remains in force during the transition. Properly completed paperwork and carrier confirmation create an administrative record that supports the intended estate planning treatment of the policy proceeds.
After formation, ongoing trust administration ensures premiums are paid, records are maintained, and distributions follow the trust terms. We provide guidance on gift documentation for premium funding, trustee reporting, and periodic reviews to adjust trust terms if necessary due to life changes or changes in law. Regular administrative attention helps preserve the ILIT’s benefits and prevents unintended estate inclusion or lapses in coverage, ensuring the trust continues to serve its intended role within the broader estate plan.
Trustees or administrative agents should monitor premium payments and maintain detailed records of gifts and expenditures related to the policy. Accurate recordkeeping supports tax reporting, demonstrates compliance with funding plans, and helps avoid disputes among beneficiaries. We advise on best practices for maintaining documentation, communicating with beneficiaries, and coordinating with financial professionals to preserve the trust’s long-term function and to ensure that policy maintenance aligns with the grantor’s expectations.
Periodic reviews of the ILIT and related documents are important to address life events, changes in financial circumstances, and shifts in tax or insurance landscapes. We recommend conducting reviews at key milestones such as births, marriages, divorces, or significant changes in asset values. During these reviews, adjustments to funding strategies, trustee appointments, or coordination among estate instruments can be made to maintain alignment with the grantor’s objectives and to respond to evolving needs of beneficiaries under California law.
An Irrevocable Life Insurance Trust is a trust created to own life insurance policies and to receive policy proceeds at death according to the trust terms. By transferring ownership and naming the trust as beneficiary, the policy proceeds may be kept outside the grantor’s personal estate, allowing for controlled distribution and potential estate planning benefits. The trustee manages the policy, ensures premium payments, and distributes proceeds to beneficiaries under the terms set by the grantor. The trust document should clearly specify trustee powers, successor trustees, and distribution instructions. Setting up an ILIT involves drafting the trust agreement, executing transfer or purchase paperwork with the insurance carrier, and establishing funding mechanisms for premiums. The process requires coordination among the grantor, trustee, insurance carrier, and often financial advisors to ensure correct ownership changes and ongoing administration. Proper documentation and recordkeeping are important to preserve the intended results and to reduce the chance of administrative complications that could affect proceeds or tax treatment.
Transferring a policy to an ILIT can remove the policy proceeds from the grantor’s estate for federal estate tax purposes if certain timing and ownership requirements are met. A key consideration is that transfers made within a specified period prior to death may be included in the grantor’s estate under federal rules, so timing is critical. It is important to plan transfers with knowledge of those timing rules and to coordinate with other estate planning measures to achieve the desired tax outcome. Whether an ILIT achieves the intended tax treatment depends on careful execution, including changing ownership and beneficiary designations, documenting premium funding, and maintaining the trust as an independent legal entity. Because tax rules and thresholds can change, a review with legal and financial advisors is recommended to understand how an ILIT fits into current tax planning strategies and the grantor’s overall estate objectives.
Premiums for an ILIT are commonly funded through annual gifts from the grantor to the trust to cover premium payments. Those gifts may fall within the federal annual gift tax exclusion, depending on the amount and how they are structured. Proper documentation of gifts and timely transfers to the trustee are important to support whether the payments are treated as completed gifts and to show the source of premium payments for trust records and potential tax reporting. In some cases, larger premium payments or irregular funding may trigger gift tax filing obligations. The trustee should maintain detailed records of premium receipts and use of trust funds. Coordination with a tax advisor helps determine whether gift tax returns are needed and how to structure contributions to balance funding needs with tax considerations while keeping the ILIT effective for its intended purpose.
Choosing a trustee for an ILIT is a significant decision because the trustee will manage the policy, handle premium payments, maintain records, and make distributions according to trust terms. Trustees can be family members, trusted friends, or professional entities, but the choice should reflect a person or institution capable of reliable administration and adherence to the grantor’s instructions. Naming a successor trustee is also important to ensure continuity if the initial trustee cannot serve. Trustee duties include communicating with beneficiaries, coordinating with insurance carriers, and preparing any necessary tax filings. The trustee must follow the trust document and applicable fiduciary rules, so the grantor should consider administrative skill, impartiality, and availability when appointing a trustee. Involving a co-trustee or providing administrative support can help mitigate the burden on an individual trustee.
An ILIT can offer protections that reduce the likelihood that life insurance proceeds will be reachable by creditors of the beneficiaries or by claims arising from remarriage, subject to applicable law and trust terms. Because proceeds are paid into the trust and distributed according to trust instructions, the trust can limit direct ownership by beneficiaries and impose conditions that protect funds from immediate creditor access. Such protections depend on the trust’s structure and relevant creditor law in the beneficiary’s jurisdiction. While an ILIT may provide a level of protection, it should be viewed as part of a broader asset protection and estate plan. The degree of protection can vary based on the nature of creditor claims, timing of transfers, and laws governing trusts in California and other relevant states. Consultation regarding trust drafting and coordination with other protective measures helps maximize the intended benefits.
If a policy placed in an ILIT lapses due to missed premiums or other issues, the trust loses the intended benefit of providing proceeds at death unless remedial action is taken. Trustees should monitor premium payments, maintain communication with the insurance carrier, and have plans to address premium shortfalls, such as alternative funding sources, policy adjustments, or replacement policies. Prompt attention to premium notices and carrier communications can often prevent lapses and preserve the trust’s purpose. When a lapse occurs, options may include attempting to reinstate the policy if permitted by the carrier, funding a new policy owned by the trust, or revising trust planning to achieve similar objectives. The feasibility of these options depends on health underwriting, carrier rules, and timing. Regular administrative oversight reduces the risk of lapses and supports continuity of coverage in line with the grantor’s goals.
An ILIT typically functions alongside a revocable living trust and pour-over will to create a comprehensive estate plan. While the ILIT specifically handles life insurance ownership and proceeds, a revocable living trust can manage other assets and avoid probate for those assets transferred into it. A pour-over will directs any remaining probate assets into the revocable trust, ensuring assets not previously transferred still receive trust-based administration. Coordinated planning ensures consistency across documents and avoids conflicting beneficiary designations. Coordination involves reviewing beneficiary designations, naming conventions, and funding strategies so that each document supports the overall objectives. Regular reviews help ensure the ILIT remains aligned with changes to the revocable trust or will and that distributions occur in the sequence intended by the grantor. Clear documentation and consistent naming reduce administrative friction and potential disputes during estate settlement.
Timing is an important factor when transferring an existing policy into an ILIT because federal rules can include certain transfers in the grantor’s estate if the transfer occurs within a specified period before death. Grantors should consider the timing of transfers, carrier processing time, and any medical underwriting that may be required if replacement policies are considered. Early planning reduces the risk that transfers will be treated as ineffective for estate tax purposes due to timing concerns. Additionally, immediate administrative steps after transfer—such as documenting gifts used to pay premiums and confirming carrier records—are important to support the intended trust treatment. Coordination with legal and financial advisors ensures that transfers are structured and timed appropriately relative to the grantor’s broader estate and tax planning objectives.
Yes, an ILIT can purchase a new policy with the trust as owner and beneficiary, subject to underwriting and carrier requirements. When the trust purchases a new policy, the trust is the policy owner from inception, which avoids some of the timing concerns associated with transferring an existing policy. The trust must be properly structured to allow for premium funding and administration, and the trustee should be authorized to handle policy matters on behalf of the trust. Purchasing a new policy through the trust involves medical underwriting and policy selection decisions, and it may offer the benefit of clean title at inception. Coordination with the insurance agent and legal counsel ensures the purchase documents reflect trust ownership and that funding arrangements are in place to keep the policy in force according to the grantor’s objectives.
An ILIT and related estate planning documents should be reviewed periodically and after significant life events such as marriage, divorce, births, deaths, changes in asset values, or major changes in tax law. Regular reviews help confirm that the trust remains aligned with family priorities, that premium funding remains sustainable, and that trustees and beneficiaries continue to reflect current circumstances. Proactive reviews reduce the risk that outdated documents will produce unintended results at the time of administration. We recommend scheduling reviews on a regular basis, such as every few years, and immediately after any major event that affects your estate plan. During reviews, we assess policy performance, trustee arrangements, and coordination with other estate instruments to ensure the ILIT remains an effective element of the overall plan.
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