An Irrevocable Life Insurance Trust (ILIT) can be a powerful estate planning tool for homeowners and families in Hollister. This trust holds life insurance policies outside of a taxable estate to help provide liquidity, cover estate taxes, and preserve wealth for beneficiaries. At the Law Offices of Robert P. Bergman in San Jose serving San Benito County, we help clients understand how an ILIT may fit into broader estate plans that can include revocable living trusts, wills, powers of attorney, and health care directives. If you own life insurance and want to protect policy proceeds for loved ones, an ILIT may be an effective option to explore further with an attorney.
Deciding whether an ILIT is appropriate depends on family circumstances, asset makeup, and long-term goals. An ILIT involves transferring ownership of a life insurance policy into a trust that the grantor cannot revoke, which removes the death benefit from the grantor’s taxable estate under many conditions. The process requires careful drafting to meet federal tax rules, naming trustees and beneficiaries, and coordinating with existing estate planning documents such as pour-over wills, trust modification petitions, and guardian nominations. Our approach focuses on clear communication about how an ILIT interacts with retirement plan trusts, irrevocable life insurance arrangements, and other legacy planning strategies.
An ILIT matters because it can create liquidity at death, reduce potential estate tax exposure, and protect insurance proceeds from creditor claims or mismanagement. For clients who own substantial life insurance policies or face potential estate tax liabilities, placing a policy in an ILIT can keep proceeds out of the taxable estate when properly structured. Additionally, the trust can control how and when beneficiaries receive funds, support long-term needs such as care for a disabled family member, and preserve assets for future generations. When coordinated with documents like a revocable living trust or a pour-over will, an ILIT becomes part of a cohesive plan that reflects family priorities and financial realities.
The Law Offices of Robert P. Bergman provides estate planning services to clients across San Benito County, including Hollister and surrounding communities. Our firm focuses on practical, client-centered planning that integrates life insurance trusts with other estate documents such as wills, powers of attorney, health care directives, and various trust types like special needs trusts and pet trusts. We emphasize personalized plans tailored to each family’s circumstances, helping clients make informed choices about trustees, beneficiary designations, and funding strategies to achieve intended outcomes while complying with California and federal tax rules.
An ILIT is a trust designed to own life insurance policies for the benefit of named beneficiaries. By removing ownership and incidents of ownership from the insured’s estate, an ILIT can remove proceeds from estate taxation when aligned with applicable transfer rules. The grantor transfers an existing policy or arranges for the trust to purchase a new policy, names trustees to manage the trust, and sets terms for how proceeds are distributed after the insured’s death. Proper administration requires attention to gift tax rules, Crummey notice provisions where applicable, and careful coordination with beneficiary designations to ensure the trust receives the proceeds.
Funding an ILIT can be achieved by transferring ownership of an in-force policy to the trust or by having the trust obtain a new policy. If a policy is transferred, a three-year lookback rule may apply before the proceeds are excluded from the estate, so timing matters. Trustees have responsibilities to manage premium payments and follow distribution instructions. An ILIT can include provisions for protecting assets, addressing special needs beneficiaries, or preserving family wealth across generations. Ongoing administration and communication with trustees and beneficiaries help ensure the trust works as intended over time.
An Irrevocable Life Insurance Trust is a legal arrangement in which life insurance policies are owned by a trust rather than by the individual insured. The trust holds the policy, receives death benefit proceeds, and follows instructions set by the grantor for distribution to beneficiaries. Because the grantor relinquishes ownership, the death benefit may be excluded from the taxable estate if the trust is properly structured and any required holding periods are observed. The ILIT also defines trustee powers, successor trustees, and distribution terms to align with the grantor’s objectives for family support, tax planning, and asset protection.
Creating an ILIT involves several important steps: drafting trust documents to define beneficiaries and trustees, transferring or issuing the life insurance policy in the name of the trust, and setting up processes for premium payments and notices to beneficiaries if required. Trustees must follow fiduciary duties, maintain records, and make distributions according to the trust terms. Coordination with other estate documents, updating beneficiary designations, and considering the three-year transfer rule are all practical considerations. Regular review of the trust and related policies helps adapt the plan as family dynamics and financial circumstances change.
Understanding terminology helps clients make informed decisions when establishing an ILIT. Common terms include grantor, trustee, beneficiary, irrevocable, and incidents of ownership, each of which affects how the trust functions and how proceeds are treated for tax and estate purposes. Knowing these terms clarifies responsibilities, timing, and the legal consequences of transferring a policy into a trust. Clear definitions also help when coordinating an ILIT with related documents such as a pour-over will, trust modification petitions, or retirement plan trusts to ensure the overall estate plan achieves intended goals.
An Irrevocable Life Insurance Trust is a durable trust designed to own life insurance policies so that proceeds are managed according to trust terms and may be excluded from the grantor’s taxable estate. The trust is irrevocable, meaning the grantor gives up the ability to unilaterally revoke or change the ownership of the policy without following formal modification procedures. The ILIT defines trustees, beneficiaries, distribution terms, and instructions for premium funding. Proper drafting addresses tax considerations, including the timing of transfers, gift tax implications, and mechanisms for maintaining compliance with federal rules.
A trustee is the individual or entity appointed to hold legal title to trust assets and to manage them in accordance with the trust document. In an ILIT, the trustee is responsible for paying premiums when needed, keeping records, communicating with beneficiaries, and administering distributions when the policy proceeds are paid. Trustees have fiduciary duties to act in beneficiaries’ best interests and to follow the terms set by the grantor. Choosing a trustee involves considering availability, financial acumen, and neutrality to reduce potential conflicts among beneficiaries.
The grantor is the person who creates the trust and transfers assets into it. For an ILIT, the grantor arranges for the transfer of a life insurance policy or the purchase of a new policy in the trust’s name, and sets the trust’s terms for beneficiaries and distributions. Because the trust is irrevocable, the grantor must understand the limits on reclaiming ownership and the tax implications of transfers. Clear instructions in the trust document, along with professional advice, help ensure the grantor’s goals for family support and tax planning are achieved.
A beneficiary is the person or entity designated to receive payments or property from the trust according to its terms. In an ILIT, beneficiaries typically receive life insurance proceeds after the insured’s death, either outright or in trust-managed distributions. Beneficiaries can include family members, charities, or trusts created for minor children or individuals with special needs. The trust can set conditions, staggered distributions, or protective provisions to preserve funds and align distributions with the grantor’s intentions and the beneficiaries’ needs.
When evaluating an ILIT versus other tools like a revocable living trust or beneficiary designations, consider goals such as estate tax reduction, asset protection, and control over distribution timing. A revocable trust provides flexibility and management during life but does not remove a life insurance benefit from the taxable estate if incidents of ownership remain. An ILIT, in contrast, removes ownership and can preserve proceeds for beneficiaries under trust terms. The right selection often depends on the client’s assets, family structure, and tax exposure, and may involve combining documents for a cohesive plan.
A more limited approach can be appropriate when a family has modest life insurance proceeds, minimal estate tax risk, and straightforward beneficiary needs. In such circumstances, updating beneficiary designations and using a revocable living trust or will might adequately accomplish the client’s objectives without the permanence of an irrevocable vehicle. This path may be simpler to administer, allow the owner to retain flexibility during life, and reduce the immediate complexity of trust funding. Clients with uncomplicated estates often prefer a streamlined plan that still protects heirs and documents wishes clearly.
If maintaining control over life insurance is a priority, a limited approach using revocable arrangements can be suitable. Keeping policies under personal ownership allows the insured to adjust coverage amounts, change beneficiaries, or surrender policies if circumstances change. This flexibility can be valuable for those who expect evolving family or financial situations. However, retaining control can leave proceeds subject to estate inclusion. It’s important to weigh the benefits of flexibility against potential tax and creditor exposure and to document choices clearly so that wishes are honored.
Comprehensive planning becomes important when estate tax exposure is a concern and beneficiaries will need immediate liquidity to settle obligations such as taxes, debts, or probate costs. An ILIT can provide funds that are outside the taxable estate, making it easier for heirs to pay expenses without selling assets. Integrating the ILIT with retirement plan trusts, pour-over wills, and asset assignments ensures coordinated timing and avoids unintended tax consequences. A thorough plan addresses trustee selection, funding strategies, and contingencies to safeguard family interests and financial stability.
A comprehensive approach helps protect beneficiaries who may be minors, have special needs, or require oversight to manage substantial proceeds responsibly. An ILIT can establish distribution schedules, create subtrusts for specific beneficiaries, and include protective features that reduce the risk of mismanagement or creditor claims. By aligning the ILIT with documents like special needs trusts and guardianship nominations, the plan can meet complex family dynamics and ensure continuity of care. A well-coordinated trust structure makes it easier to honor the grantor’s intentions while delivering support where and when it is needed.
A comprehensive ILIT approach offers several benefits: potential reduction of estate tax exposure, prearranged liquidity to settle obligations, structured distributions for heirs, and coordination with other estate documents to avoid conflicts and unintended consequences. Combining an ILIT with powers of attorney, advance health care directives, and certification of trust documents helps create a unified plan that guides decision-making during incapacity and after death. Thoughtful planning also minimizes the chance of disputes and streamlines administration for trustees and family members.
Beyond tax and liquidity advantages, a holistic plan improves clarity and preserves family intentions. It allows for tailored provisions such as retirement plan trust integration, Heggstad petitions, or trust modification petitions when circumstances warrant adjustments. By documenting choices about guardianship nominations and beneficiary protections, families reduce uncertainty and ensure smoother transitions. This coordinated planning approach contributes to financial stability for beneficiaries and peace of mind for grantors who want to leave a lasting, well-managed legacy.
One central benefit of using an ILIT is that it can keep insurance proceeds out of the grantor’s taxable estate when properly structured. By transferring ownership of the policy to the trust and observing any applicable holding periods, the death benefit may not be counted as part of estate assets for tax calculation purposes. This separation helps beneficiaries receive the intended funds without increased estate tax burden. Ensuring accurate documentation, timely transfers, and compliance with federal rules is essential to obtain the anticipated tax treatment and to protect the grantor’s legacy.
A comprehensive plan allows the grantor to set detailed instructions for how proceeds will be distributed, whether in lump sums, staged payments, or managed trusts for beneficiaries. This control can address unique family needs such as ongoing care for a dependent, funding for education, or preserving assets for future generations. Trust provisions can limit access to funds until certain ages or milestones, require trustee oversight, or provide for discretionary distributions based on need. Such mechanisms help preserve assets and support long-term financial stability for beneficiaries.
Selecting the right trustee is an important practical step when establishing an ILIT. A trustee should be someone who can manage administrative duties, maintain records, and communicate effectively with beneficiaries. Consider availability, trustworthiness, and familiarity with financial matters when naming a trustee. In some cases a corporate trustee or co-trustees may make sense to balance administrative continuity with personal knowledge of family circumstances. The trustee will be responsible for premium payments, notices, and making distributions according to the trust’s terms, so clear instructions and backup arrangements reduce the risk of disruption.
An ILIT requires a sustainable plan for funding premiums so coverage remains in force. The grantor may gift funds to the trust for premium payments and use annual gift exclusions or other gifting strategies to minimize tax consequences. Trustees must track incoming gifts and apply them to premium obligations while keeping accurate records. Discuss funding alternatives and contingency plans for premium payments with your attorney and trustee to avoid unintentional lapses that could undermine the trust’s purpose. Regular reviews ensure the trust continues to meet objectives as circumstances change.
Families consider an ILIT when they want to provide clear, managed life insurance proceeds to heirs while minimizing estate tax exposure and creating liquidity for final expenses or debts. An ILIT can be particularly helpful when underlying assets are illiquid, such as real estate or a family business, and beneficiaries would otherwise have to sell assets to pay taxes. Additionally, the trust structure allows the grantor to set distribution terms that reflect the family’s needs, and to plan for beneficiaries who may need oversight or ongoing support.
An ILIT may also be appropriate for clients who wish to protect proceeds from creditor claims or to ensure benefits are managed for beneficiaries with special needs or limited financial experience. Integrating an ILIT with other planning tools like retirement plan trusts, pour-over wills, and advance health care directives creates a coordinated legacy plan. Because an ILIT is irrevocable, careful consideration of timing, trustee selection, and funding strategies is important to achieve the desired results and to avoid unintended tax or administrative complications.
Typical circumstances that lead clients to consider an ILIT include owning large life insurance policies, potential estate tax exposure, illiquid estates, blended family concerns, or a desire to protect proceeds for minors or beneficiaries with special needs. Business owners who need liquidity to fund buy-sell agreements or to pay business-related debts can also benefit from life insurance held in trust. Each family’s situation is unique, and a tailored analysis helps determine whether an ILIT, combined with other trust arrangements or wills, is the best path forward.
When the death benefit of life insurance policies is substantial relative to the estate, an ILIT may be used to reduce taxable estate value and preserve funds for heirs. Moving policy ownership to a trust can separate proceeds from estate calculations if transfer rules and holding periods are observed. This arrangement supports beneficiaries by providing funds to pay taxes and debts without forcing the sale of family assets. Careful planning and timing of transfers are essential to secure the intended tax advantages and to ensure the trust functions properly after the grantor’s death.
If heirs would need cash to pay estate-related expenses such as taxes, probate costs, or outstanding debts, an ILIT can provide liquidity that reduces pressure to sell assets at unfavorable times. The trust receives policy proceeds quickly after a claim is processed, giving trustees the resources to manage estate settlement efficiently. This liquidity is particularly helpful when the estate includes real estate, business interests, or other assets that cannot be converted easily to cash without incurring losses or delays.
An ILIT can protect insurance proceeds from creditor claims in some circumstances and limit direct control by beneficiaries who might be vulnerable to poor financial decisions. The trust terms can limit distributions, set conditions, or appoint a trustee to manage funds prudently for the beneficiary’s benefit. This structure helps ensure that funds are used for long-term needs such as education, care, or income replacement rather than being dissipated quickly. It is a thoughtful way to balance protection with support for heirs.
The Law Offices of Robert P. Bergman serves clients in Hollister and throughout San Benito County with estate planning services focused on practical outcomes. We assist with ILITs, revocable living trusts, pour-over wills, powers of attorney, advance health care directives, and trust-related petitions. Our goal is to help clients organize their affairs, protect beneficiaries, and ensure continuity of planning. We provide clear explanations of options, draft documents tailored to individual circumstances, and guide clients through funding and administration to align legal tools with family priorities.
Clients choose our firm for practical, responsive estate planning that reflects California law and local realities. We emphasize transparent communication, thoughtful drafting, and coordination among trust documents to reduce the chance of disputes and ensure plans work as intended. Our work includes preparing documents like irrevocable life insurance trusts, retirement plan trusts, and certifications of trust, and guiding clients through funding and beneficiary coordination to achieve specific goals for asset protection and distribution.
We help clients through each stage of the planning process, from assessing whether an ILIT is appropriate to implementing transfers and documenting trustee responsibilities. Our approach includes reviewing insurance ownership, advising on timing to address three-year rules, and preparing necessary notices and trust administration guidance. We focus on clear, practical solutions that align with clients’ values and family needs, while keeping records organized to facilitate trustee action and beneficiary transitions.
Our firm also assists with related matters such as trust modification petitions, Heggstad petitions for beneficiaries, pour-over wills, and guardianship nominations, ensuring that the entire estate plan operates in harmony. For clients with complex situations involving special needs trusts, pet trusts, or business succession considerations, we deliver coordinated planning that anticipates future events and supports long-term family objectives.
Our process begins with an initial consultation to review assets, insurance policies, family dynamics, and goals for beneficiaries. We evaluate whether an ILIT fits within the broader estate plan, identify potential tax or timing issues, and recommend a strategy for funding and trustee selection. Once terms are agreed, we draft the trust document, coordinate policy transfers or new policy issuances, and prepare supporting documents like certification of trust and pour-over wills. We also provide guidance for ongoing administration to ensure premium payments and recordkeeping are handled properly by trustees.
In the initial review, we gather information about existing policies, beneficiary designations, and estate objectives. We assess whether transferring a policy to an ILIT or purchasing a policy within the trust is preferable, taking into account timing rules and potential gift tax considerations. We also review related documents like revocable living trusts, wills, power of attorney designations, and health care directives. This discovery phase sets the strategy for drafting trust provisions, trustee duties, and funding arrangements to align with the client’s goals.
Document review includes collecting policy statements, beneficiary forms, trust documents, and any relevant financial statements. We identify ownership and beneficiary inconsistencies and determine steps to transfer ownership or adjust designations so the ILIT receives proceeds as intended. This inventory helps us recommend appropriate trust language and funding mechanisms. Clear documentation at this stage reduces the risk of conflicts or surprises during administration and provides a roadmap for trustees to follow when the time comes.
During the strategy meeting, we discuss trustee options, distribution preferences, and any protective provisions needed for beneficiaries. We consider whether to include subtrusts, conditions for distributions, or integration with special needs planning. Based on the client’s objectives, we design trust provisions that manage incidents of ownership, address tax considerations, and specify administration procedures. The resulting plan reflects both practical needs and family values while ensuring legal compliance with tax and trust law.
After agreeing on terms, we prepare the ILIT document and any related instruments such as pour-over wills, powers of attorney, and certification of trust. We coordinate with insurance providers to change ownership and beneficiary designations where appropriate or to arrange for new policy issuance in the trust’s name. We also prepare funding instructions and, if necessary, draft gift documentation and notices to satisfy tax planning requirements. Implementation includes clear instructions for trustees to follow in maintaining coverage and administering distributions.
Drafting includes detailed provisions for trustee powers, beneficiary classes, distribution terms, and successor trustees. Where gifts are used to fund premiums, we prepare documentation and Crummey notices when applicable to preserve gift tax benefits. We ensure that trust language addresses potential contingencies, such as policy lapse, trustee resignation, or changes in family circumstances, so trustees have guidance to respond properly. Clear, practical drafting reduces future disputes and streamlines administration.
Coordination with insurers is required to transfer ownership or issue a policy in the trust’s name. We assist in completing forms, communicating with carriers, and documenting the transfer so records reflect the trust as the owner and beneficiary. Funding mechanisms are established to ensure premium payments are made, including regular gifts to the trust or other arrangements. Properly documenting these steps helps preserve the intended tax treatment and ensures the trust remains effective when benefit claims arise.
Once the ILIT is in place, the trustee should follow administration protocols for premium payments, recordkeeping, and beneficiary communications. Periodic review of the trust in light of changes in law, family dynamics, or financial circumstances helps keep the plan current. We provide guidance for trustees on reporting, distributions, and responding to claims, and we can assist with petitions or modifications if changes become necessary. Ongoing attention ensures the ILIT continues to serve its intended role within the broader estate plan.
Trustee responsibilities include maintaining accurate records of premium payments and gifts, filing any necessary tax returns, and communicating with beneficiaries. We help trustees understand reporting obligations and provide templates and checklists to simplify administration. Keeping thorough documentation reduces the potential for disputes and makes it easier to defend the trust’s treatment for tax or legal purposes. Support for trustees ensures beneficiaries receive timely information and that distributions follow the grantor’s documented wishes.
Life changes such as births, deaths, marriages, divorces, or significant shifts in asset values can affect the suitability and operations of an ILIT. Regular reviews allow for adjustments through appropriate procedures, which may include trust modification petitions or related estate document updates. While the trust is irrevocable, planning for contingencies and confirming that trustee and beneficiary designations remain appropriate helps preserve the plan’s effectiveness. Reviews also ensure premium funding is sustainable and that the trust continues to meet family goals.
An Irrevocable Life Insurance Trust is a trust that owns one or more life insurance policies so that policy proceeds are managed and distributed according to the trust terms. The grantor transfers ownership of the policy to the trust or causes the trust to purchase a new policy, and the trustee is responsible for maintaining the policy and distributing proceeds to beneficiaries after the insured’s death. The trust’s irrevocable nature means the grantor gives up direct control over the policy, which can create estate tax benefits and provide management protections for beneficiaries. The trust functions through careful drafting of trustee powers, beneficiary designations, and funding mechanisms for premiums. Trustees make premium payments, keep records, and follow distribution instructions in the trust document. Proper coordination with other estate documents like wills and powers of attorney ensures the ILIT works as part of a broader plan. Timing and compliance with federal transfer rules are important to secure the intended tax treatment.
Transferring an existing policy into an ILIT is often possible, but timing and tax rules must be considered. A transferred policy may be subject to a lookback period during which the proceeds remain includable in the transferor’s estate for tax purposes if the insured dies within three years of the transfer. It is important to evaluate the timing of any transfer and the client’s health outlook and to document the transfer carefully. In some situations purchasing a new policy in the trust can avoid lookback issues but requires underwriting and other considerations. The mechanics of a transfer include changing ownership and, if needed, beneficiary designations so the trust is listed appropriately. We assist with insurer forms, gift documentation, and funding arrangements to cover premiums. Considering the three-year rule and coordinating with overall estate objectives helps determine whether transferring an existing policy or issuing a new one within the trust best serves the client’s goals.
Placing a policy in an ILIT can remove it from your taxable estate, but only when certain conditions are met. If the trust owns the policy and the grantor has given up incidents of ownership, the proceeds may be excluded from the grantor’s estate. However, transfers made shortly before death can be pulled back into the estate by federal rules, and other facts about ownership and control can affect treatment. Proper drafting, timing, and compliance with tax rules are essential to achieve exclusion of proceeds from the estate. Additionally, beneficiary designations and how premiums are funded can influence tax consequences. Documenting transfers, maintaining clear records of gifts used for premiums, and ensuring the trust meets the legal requirements reduce the risk that proceeds will be treated as part of the estate. Consultation and careful implementation help secure the intended outcomes under the current tax framework.
A trustee should be someone who can carry out administrative duties reliably, manage financial matters responsibly, and communicate transparently with beneficiaries. Many clients name a trusted family member, friend, or a corporate trustee depending on the complexity of the trust and the need for continuity. Co-trustees are sometimes used to combine personal knowledge with professional administration. The choice should reflect availability, impartiality, and organizational skills to ensure premiums are paid and distributions follow the trust’s directives. Trustee duties can include maintaining records, filing any necessary tax documents, and handling claims. If a trustee lacks familiarity with trust administration, professional support or a co-trustee arrangement can provide practical benefits. Discussing options ahead of time and naming successor trustees creates continuity and reduces the likelihood of administrative delays or conflicts among beneficiaries.
Once a policy is owned by an ILIT, premium payments generally must be provided to the trust by the grantor or other donors. Common practice involves gifting annual amounts to the trust sufficient to cover premiums, using gifting strategies to minimize tax consequences. Trustees then use those funds to pay premiums to the insurer. Proper documentation of gifts and payments is important to maintain transparency and ensure the trust can continue to hold the policy without lapse. Mechanisms such as Crummey withdrawal rights may be utilized in some cases to preserve gift tax treatment when gifts to the trust are made for premium funding. Trustees keep records of incoming gifts, premium payments, and trust expenses. Planning ahead for funding helps avoid unintended lapses in coverage and ensures the trust can perform its intended role at the time of claim.
If the insured dies within three years of transferring a policy to an ILIT, federal tax rules can cause the policy proceeds to be included in the transferor’s estate. This rule is designed to prevent last-minute transfers intended solely to avoid estate taxes. Because of the lookback period, timing is an important consideration when transferring an existing policy, and clients should weigh health status and other timing risks when planning transfers. In some cases, alternatives such as arranging for a new policy to be issued in the ILIT or using other estate planning strategies may be considered to avoid the three-year inclusion rule. A careful review of options and potential trade-offs helps clients choose an approach that aligns with their goals while minimizing unintended tax consequences.
An ILIT can be structured to provide for special needs or minor beneficiaries by creating subtrusts or distribution rules that prioritize care and support while preserving eligibility for government benefits. The trust terms can direct distributions for health, education, maintenance, and support while appointing a trustee to manage funds in the beneficiary’s best interest. When special needs are involved, coordinating an ILIT with a properly drafted special needs trust helps ensure that benefits are preserved and additional support is provided without jeopardizing assistance programs. For minor beneficiaries, the ILIT can delay distributions until specified ages or milestones and provide for trustee oversight to prevent premature depletion of assets. Guardianship nominations and other estate documents should be coordinated so that a comprehensive plan protects minors and supports long-term financial goals according to the grantor’s wishes.
An ILIT complements a revocable living trust and will by handling life insurance proceeds separately and according to the ILIT’s terms. While a revocable trust manages assets during life and can provide a streamlined probate alternative, it typically does not remove the death benefit of a policy from the grantor’s taxable estate unless ownership is transferred to an ILIT. A pour-over will may direct assets to a revocable trust, but life insurance intended for the ILIT should be owned by the trust and not payable directly to the estate. Coordination among these documents avoids conflicting beneficiary designations and ensures that assets flow to intended recipients in a predictable manner. Periodic review of all documents together helps maintain alignment with changing circumstances and legal developments, ensuring the overall estate plan functions cohesively.
Yes, trustees have ongoing administrative duties including maintaining records of premium payments and gifts, making payments to insurers, and communicating with beneficiaries as required by the trust. Trustees may also be responsible for filing any necessary tax forms and ensuring that distributions follow the trust terms. Good recordkeeping and timely action help prevent lapses in coverage and preserve the intended legal and tax benefits of the trust. Trustees should also review beneficiary contacts and funding needs periodically and consult legal counsel when complex issues arise, such as creditor claims or requests for trust modification. External resources and templates can aid trustees in fulfilling their responsibilities and protecting the trust’s assets for beneficiaries.
To begin creating an ILIT with our firm, start by scheduling an initial consultation to review your life insurance policies, assets, and estate goals. During this meeting we will evaluate whether an ILIT fits your objectives, discuss trustee options, and identify any timing or tax considerations that may affect the transfer or issuance of a policy. We will also review related documents like wills and revocable trusts to ensure consistent planning across your estate. If you decide to proceed, we prepare trust documents, coordinate with insurers to transfer ownership or issue new policies in the trust’s name, and set up funding arrangements for premiums. We provide guidance to trustees and beneficiaries to ensure the ILIT functions smoothly and achieves your intended results for family protection and asset management.
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