An Irrevocable Life Insurance Trust (ILIT) can be a pivotal component of an estate plan for individuals in Needles and throughout San Bernardino County. This page explains what an ILIT is, how it can help manage life insurance proceeds outside of a taxable estate, and the practical benefits for families seeking orderly asset transitions. At the Law Offices of Robert P. Bergman we provide clear guidance on creating and funding an ILIT tailored to local rules and family needs. This overview is designed to help readers understand the options and begin planning with confidence.
Choosing whether an ILIT is the right vehicle depends on individual financial circumstances, family relationships, and long-term goals for wealth transfer. This section outlines typical scenarios where an ILIT may be considered, including protecting insurance proceeds from estate taxes and ensuring proceeds are distributed under specific terms. We discuss how an ILIT interacts with living trusts, wills, and other estate planning tools commonly used in California. Our goal is to present practical information that helps Needles residents evaluate whether this trust aligns with their plans for protecting family financial security and preserving legacy intentions.
An ILIT can provide important protections and benefits for life insurance proceeds, removing those assets from an individual’s taxable estate and potentially reducing estate tax exposure. For families in Needles, an ILIT also offers a structured mechanism to control how insurance funds are paid out and used, whether for mortgage payments, education costs, or ongoing living expenses. Beyond tax considerations, an ILIT can offer creditor protection for beneficiaries and specify conditions for distributions, helping to avoid probate delays and preserve assets for intended heirs while maintaining privacy and continuity after a policy owner’s death.
The Law Offices of Robert P. Bergman assists individuals and families with tailored estate planning solutions, including Irrevocable Life Insurance Trusts, wills, powers of attorney, and related documents. Serving clients who live or own property in Needles and surrounding communities, the firm focuses on clear communication and practical planning that fits each client’s circumstances. We emphasize careful drafting and funding strategies to help ensure that an ILIT functions as intended under California law. Our approach is client-centered, prioritizing straightforward explanations and thoughtful preparation to minimize uncertainty for families during transitions.
An ILIT is a trust that holds ownership of a life insurance policy so that the proceeds are payable to the trust rather than to an individual beneficiary. This arrangement can help keep life insurance proceeds out of the insured’s probate estate and may reduce estate tax exposure for larger estates. Establishing an ILIT typically requires irrevocable transfer of policy ownership and careful coordination of premium payments to ensure the intended tax and control outcomes. For residents of Needles, understanding how an ILIT fits with a living trust, pour-over will, and other estate documents is essential to achieve the full benefits of the planning strategy.
Key considerations when creating an ILIT include selecting the trustee who will manage the trust, naming beneficiaries and distribution terms, handling premium funding from the grantor, and documenting any gifts made to the trust to pay premiums. It is important to consider the three-year rule in federal transfer tax law that may bring transferred policies back into the estate if the grantor dies within three years of the transfer, as well as how California law affects probate and trust administration. Thoughtful drafting anticipates these issues and sets clear instructions for how payouts will be used for the benefit of heirs.
An ILIT is a trust created to own and control a life insurance policy for the benefit of named beneficiaries. When properly formed and funded, the policy’s proceeds are paid to the trust at the insured’s death and then distributed according to the trust terms. Because the policy is owned by the trust rather than the insured, those proceeds are generally not included in the insured’s probate estate, which can provide tax and administration advantages. The trust document sets the rules for distribution, timing, and purposes of benefits, allowing families to tailor payouts to support dependents, pay debts, or fund other financial needs.
Creating an effective ILIT involves several important steps: drafting the trust agreement with precise distribution rules, transferring ownership of an existing policy or having the trust purchase a new policy, establishing a trustee to manage the trust, and arranging funding mechanisms for premium payments. The grantor must also document gifts to the trust if the trust will make premium payments on the grantor’s behalf, which can involve annual gift tax exclusion considerations. Proper implementation also includes coordinating beneficiary designations and ensuring other estate plan documents are consistent to avoid unintended results.
Understanding the terminology associated with ILITs helps clients make informed decisions. Terms like grantor, trustee, beneficiary, funding, and gift tax have specific meanings that affect how a trust operates and the outcomes it produces after the insured’s death. This glossary section defines those terms in plain language so residents of Needles can better comprehend their options. Clear definitions support better communication during the planning process and reduce the risk of unintended tax or administrative consequences when documents are drafted and executed.
The grantor is the person who establishes the trust and typically transfers ownership of the life insurance policy to the ILIT. In many ILIT arrangements, the grantor is also the insured under the policy. The grantor’s actions in transferring a policy and making gifts to the trust influence whether the policy proceeds are considered part of the grantor’s estate for tax purposes. Proper timing and documentation of transfers are essential to achieve the intended estate planning benefits and to comply with federal and state rules that affect estate inclusion and gift tax reporting.
The trustee is the individual or corporate entity responsible for managing the trust, holding the insurance policy, and administering distributions to beneficiaries under the trust terms. Trustees have fiduciary duties to follow the trust document and act in the beneficiaries’ best interests. When selecting a trustee for an ILIT, grantors consider factors such as availability, financial management skills, impartiality, and trustworthiness. The trustee also handles interactions with the insurance company, receives policy proceeds, and follows directions for investing or disbursing funds as outlined in the trust agreement.
A beneficiary is the person or entity designated to receive benefits from the trust when life insurance proceeds are paid. The ILIT document can name primary and contingent beneficiaries and set conditions or schedules for distributions. Beneficiaries might include a surviving spouse, children, other relatives, or charities. Defining beneficiaries clearly and specifying how and when they receive funds helps ensure that the grantor’s intentions are carried out and helps prevent disputes or unintended distributions following the insured’s death.
Funding refers to the process by which the trust is provided with resources to pay insurance premiums, which may involve direct gifts from the grantor or other arrangements. When the grantor gives money to the trust for premiums, it is important to document these gifts and consider gift tax implications and annual exclusion amounts. Alternatively, the trust can purchase a new policy and be the initial owner. Clear record-keeping and coordination with the insurance company are necessary to ensure ongoing premium payments and to preserve the intended tax and estate planning results.
When planning for the distribution of life insurance proceeds, individuals often choose between naming beneficiaries directly, using a revocable living trust, or creating an ILIT. Naming beneficiaries directly can be simple but may expose proceeds to probate or estate taxation if the policy owner retains incidents of ownership. A revocable living trust keeps assets out of probate while allowing flexibility, but policies owned by the grantor may remain in the taxable estate. An ILIT provides a structure specifically designed to keep insurance proceeds outside the taxable estate and to control the timing and purpose of distributions to beneficiaries.
For individuals whose overall estate value falls well below federal and state estate tax thresholds, a full ILIT may not provide significant tax savings and a simpler beneficiary designation could be adequate. In these cases, maintaining clear beneficiary designations, keeping beneficiary contact information current, and coordinating life insurance with a durable power of attorney and advance health care directive may be sufficient. A streamlined approach can reduce administrative complexity and cost while still ensuring that proceeds pass quickly to intended recipients without unnecessary delays.
When a policy owner wants beneficiaries to receive funds immediately and without trustee oversight, naming specific beneficiaries directly can provide prompt access to proceeds following a claim. This approach may suit families who have straightforward distribution goals and who prefer beneficiaries to manage funds without trust controls. However, direct beneficiary designations require careful consideration of creditor exposure, remarriage concerns, and the possibility that proceeds could be subject to probate if ownership issues are unclear. Clear documentation helps prevent complications when time matters.
For estates with significant assets, multiple properties, or complex family situations, a comprehensive planning approach that includes an ILIT can help align life insurance strategies with broader estate objectives. Comprehensive planning coordinates wills, living trusts, powers of attorney, and beneficiary designations to reduce the risk of conflicting documents and tax inefficiencies. This level of planning is particularly relevant when the potential inclusion of life insurance proceeds in a taxable estate could affect the net legacy left to heirs and when tailored distribution provisions would benefit vulnerable family members.
A comprehensive approach is important when beneficiaries include minors, individuals with special needs, or people who may require oversight for financial management. An ILIT can be drafted to provide staged distributions, guardianship funding, or ongoing support while protecting assets from creditors and unintended claims. Integrating an ILIT with other planning tools supports long-term goals such as retirement plan trusts, special needs trusts, or pet trusts. Thoughtful coordination helps ensure that each document works in harmony to provide sensible support while preserving family intentions over time.
When an ILIT is part of a coordinated estate plan, families can achieve more predictable outcomes and reduce the likelihood of disputes or costly administration. Integration allows for consistent beneficiary designations across policies and retirement accounts and aligns the allocation of life insurance proceeds with other estate assets. This holistic planning can simplify settlement processes, protect beneficiaries from creditor claims, and provide clear provisions for distribution timing. For Needles residents, a coordinated plan can reflect local considerations, property holdings, and state-specific probate procedures to improve the overall management of post-death distributions.
Beyond tax and administration benefits, incorporating an ILIT into an estate plan supports family continuity by documenting intentions for how proceeds should be used. A comprehensive plan can include contingencies for changes in family dynamics, instructions for trusts such as special needs trusts or pet trusts, and coordination with documents like powers of attorney and advance health care directives. This layered approach reduces ambiguity and helps survivors understand and follow the decedent’s wishes, ultimately minimizing stress and the potential for family conflict during an already difficult time.
One of the foremost benefits of an ILIT within a broader estate plan is the potential to keep life insurance proceeds out of the taxable estate and avoid probate delays for those assets. Removing the policy from the owner’s estate can reduce estate tax liability in appropriate cases and provide a cleaner, faster transfer of funds to beneficiaries through the trust. This approach can offer financial certainty for survivors by ensuring that funds are available when needed and managed according to written instructions, rather than being subject to probate administration and public court proceedings.
An ILIT enables grantors to set precise distribution rules that govern how and when beneficiaries receive life insurance proceeds, providing a level of control that direct beneficiary designations cannot offer. These trust provisions can protect funds from beneficiary creditors, divorce settlements, or imprudent spending by setting payment schedules, restrictions, or conditions. The trustee’s role allows for professional management of proceeds and helps ensure that funds are used for intended purposes such as education, household support, or long-term care, offering peace of mind that assets will be preserved for beneficiaries as directed.
Transferring ownership of a life insurance policy into a trust requires careful timing and documentation to avoid unintended tax consequences or estate inclusion. Grantors should document the transfer in writing, notify the insurance company, and confirm that the trust is listed as the policy owner and beneficiary. If the transfer occurs close to the grantor’s death, federal rules may include the policy in the grantor’s estate, so timing matters. Keeping meticulous records of gifts used to fund premiums and coordinating with other estate documents supports the intended outcome and reduces the likelihood of complications.
An ILIT should be coordinated with your will, revocable living trust, powers of attorney, and healthcare directives to ensure consistent planning and avoid conflicts. Confirm that beneficiary designations on retirement plans and other insurance policies do not unintentionally override trust arrangements. Updating documents after major life events, such as marriage, divorce, births, or significant changes in assets, preserves the coherence of your plan. Periodic reviews help identify necessary adjustments to keep the ILIT aligned with current objectives and family circumstances.
Consider an ILIT when you want greater control over how life insurance proceeds are managed and distributed after your death, especially if you wish to limit probate involvement or preserve benefits from estate inclusion. An ILIT is often recommended when estate valuation and ownership structure create a risk that insurance proceeds could be included in the taxable estate. It is also appropriate when beneficiaries need structured distributions, creditor protection, or when funds must be held in trust for minors or other dependents. A careful review of personal assets and family goals will clarify whether an ILIT adds meaningful value.
Another reason to consider an ILIT is to ensure continuity of financial support for dependents and to set conditions that reflect your intentions for legacy and care. If you have concerns about a beneficiary’s ability to manage a large lump-sum payment, want to guarantee funds for education or long-term care, or wish to preserve assets from certain claims, an ILIT offers flexibility. Aligning the ILIT with retirement plan trusts, special needs provisions, and guardianship nominations creates a cohesive plan that addresses multiple facets of family welfare after the policy owner’s death.
People often create ILITs when they have substantial life insurance policies, complex family dynamics, children who are minors, or concerns about estate taxes and creditor claims. Business owners may use ILITs to fund buy-sell agreements or provide liquidity for business succession, while blended families might use trusts to ensure that proceeds pass according to specific wishes. Additionally, when beneficiaries require asset protection or structured payouts to preserve public benefits, an ILIT can be tailored to meet those needs, providing a controlled framework for distributing policy proceeds in line with long-term family objectives.
When life insurance policies represent a significant portion of an estate’s value, placing the policy in an ILIT can be a strategic tool to reduce estate inclusion and mitigate potential tax liability. This is especially relevant for owners of substantial assets or real estate holdings who wish to leave liquidity to heirs without increasing the taxable estate. By ensuring the policy is owned by the trust and not the insured, proceeds may avoid being subject to estate taxes, provided transfers are completed appropriately and any relevant timing rules are observed to preserve the intended tax benefits.
Parents with young children or family members who rely on public benefits may prefer an ILIT to control the timing and conditions of distributions. Trust provisions can create scheduled payments for education, living expenses, and other needs while safeguarding eligibility for government programs through tailored language and coordination with special needs planning. The ILIT’s structure allows a trustee to manage funds prudently on behalf of vulnerable beneficiaries and to ensure that resources are available for their long-term well-being without jeopardizing necessary benefits or exposing funds to creditor claims.
Business owners sometimes place key person or owner life insurance into an ILIT to provide liquidity for succession plans, fund buy-sell agreements, or support the transition of ownership. The ILIT can ensure that proceeds are available to cover estate taxes or to buy out heirs’ interests without forcing a sale of business assets. Structuring policy ownership through a trust helps separate personal estate concerns from business continuity planning, providing a cleaner path for transferring ownership interests while preserving the operational stability of the company during a sensitive transition.
If you live in Needles or nearby communities in San Bernardino County and are considering an ILIT as part of your estate plan, the Law Offices of Robert P. Bergman can assist with practical guidance and clear document drafting. We help clients determine whether an ILIT fits their overall plan, prepare trust documents, coordinate transfers, and advise on funding strategies for premium payments. Our focus is on ensuring documents reflect clients’ wishes and work together to provide a smooth transition of assets, minimize administrative burdens, and support beneficiaries during difficult times.
The Law Offices of Robert P. Bergman provides practical, client-focused estate planning services that address the specific needs of individuals and families in Needles and throughout San Bernardino County. We emphasize clear explanations of trust mechanics, potential tax implications, and the steps required to fund and administer an ILIT effectively. Our approach centers on drafting documents that reflect each client’s priorities, reviewing beneficiary designations, and coordinating with financial institutions to reduce the risk of unintended results after death.
Clients benefit from our attention to detail in drafting trust language, preparing necessary transfer documents, and maintaining close communication throughout the implementation process. We assist with establishing trusteeship arrangements, documenting gifts for premium payments, and ensuring that trust ownership is properly reflected with insurers. For Needles residents, our goal is to create a clear, workable plan that anticipates common issues and supports efficient administration so that beneficiaries receive intended benefits with minimal delay or confusion.
We also provide guidance on complementary estate planning documents such as revocable living trusts, pour-over wills, powers of attorney, and advance health care directives to create a cohesive plan. By coordinating these documents with an ILIT, families can minimize probate exposure and ensure their wishes are honored. Our services include reviewing existing plans, recommending adjustments, and assisting with updates following life events such as marriage, divorce, births, or changes in assets to keep plans current and effective.
Our process begins with a detailed intake to learn about family structure, assets, and goals, followed by document drafting tailored to those needs. We explain transfer timing and funding options, prepare trust agreements, assist in transferring policy ownership, and coordinate beneficiary designations. We also provide checklists and help clients document gifts for premium payments when applicable. Throughout the process, we maintain clear communication and review all documents with clients to ensure they align with broader estate planning objectives and local legal requirements in California.
The initial step is a consultation to assess your estate planning goals, insurance holdings, family needs, and any potential tax or succession concerns. We gather information about existing policies, current beneficiary designations, and other estate planning documents. This assessment helps determine whether an ILIT is suitable and identifies the funding approach for premiums. We discuss trustee options, distribution goals, and timing considerations to craft a plan that aligns with your long-term priorities and the needs of your beneficiaries.
We review current policies, wills, trusts, powers of attorney, and beneficiary designations to identify inconsistencies and opportunities for coordination. This review ensures ownership and beneficiary designations reflect the intended plan and avoids conflicts that can undermine an ILIT’s benefits. We look for incidents of ownership that might pull a policy back into the estate and discuss corrective measures. Clear documentation and alignment among existing documents are essential to implement an effective ILIT and to reduce the risk of unintended consequences after the policy owner’s death.
During the planning stage we explore how premiums will be paid, whether through annual gifts to the trust, contributions from the grantor, or other funding methods. We explain gift tax considerations, the annual exclusion, and the need to document transfers so they qualify for the intended treatment. Establishing a consistent funding strategy helps ensure the trust can maintain the policy without lapses and supports the desired outcome for keeping proceeds out of the taxable estate. Proper communication with the trustee and insurance carrier is part of this coordination.
Once the plan is agreed upon, we draft the ILIT document with precise distribution instructions, trustee powers, and provisions tailored to your goals. We prepare the transfer documents required to change policy ownership or to purchase a new policy in the name of the trust. This phase includes coordinating with the insurance carrier, confirming ownership changes, and ensuring beneficiary designations point to the trust where appropriate. We also provide the client with documentation and guidance on funding premiums and record-keeping to support the trust’s operation.
The trust agreement outlines who will serve as trustee, how proceeds will be managed, and the timing and conditions for distributions. We draft clear trustee powers for administering investments, making payments, and reporting to beneficiaries. Provisions can include staggered distributions for different ages, support standards, and directives for specific expenses such as education or healthcare. Carefully drafted trustee provisions reduce ambiguity and give trustees concrete authority to act in ways that honor the grantor’s intentions while protecting assets for beneficiaries’ benefit.
We assist clients in executing the necessary forms to change ownership and beneficiary designations, work directly with insurance companies as needed, and confirm that accounts reflect the trust as owner and beneficiary. Proper execution helps prevent disputes and ensures that the policy will pay directly to the trust upon the insured’s death. We also advise clients on maintaining documentation of gifts used for premium payments and on updating other estate documents to maintain consistency across the plan.
After the ILIT is established and funded, periodic reviews ensure the plan remains aligned with changing laws and family circumstances. We recommend reviewing the trust following major life events or changes in financial status to adjust trustee appointments, distribution terms, or funding strategies. Ongoing administration may involve assisting trustees with claims, investments, and distributions when the policy pays out. Regular check-ins ensure documents continue to reflect intentions and that beneficiaries’ needs are being met as circumstances evolve.
When a claim arises, trustees may need assistance filing paperwork, coordinating with the insurance company, and distributing proceeds in accordance with the trust terms. We provide guidance to trustees on administrative responsibilities, record-keeping, and compliance with fiduciary duties. Supporting trustees through claims and post-death administration helps ensure that distributions are made promptly and properly, and that the trust’s terms are respected while minimizing disputes and administrative delays for beneficiaries who rely on those funds.
We recommend regular reviews of ILITs and related estate planning documents to reflect changes such as births, deaths, marriages, divorces, or significant changes in assets. Periodic updates help maintain the effectiveness of the trust and ensure it continues to meet goals for distribution, protection, and tax planning. These reviews also provide an opportunity to confirm that premium funding remains sustainable and that trustees are able to fulfill their duties. Timely updates reduce the risk of unintended results and keep the estate plan current with personal and legal developments.
An Irrevocable Life Insurance Trust is a trust that owns a life insurance policy and receives the policy proceeds at the insured’s death. By having the trust own the policy, the proceeds are paid to the trust and then distributed according to the trust terms rather than passing directly to named beneficiaries or through probate. This structure can provide control over distributions, protect proceeds from certain claims against beneficiaries, and, in appropriate circumstances, keep the proceeds from being included in the insured’s taxable estate. To set up an ILIT, the grantor signs a trust agreement, transfers an existing policy into the trust or has the trust purchase a new policy, and organizes funding for premiums. The trustee manages the policy and distributes proceeds per the trust document. Clear documentation of transfers and funding is essential, and coordination with other estate planning documents ensures that the ILIT functions as intended within a broader plan.
Transferring a life insurance policy to an ILIT can remove the policy from your taxable estate, but this result is not automatic in all situations. Federal rules include a three-year look-back period that may bring policies back into the transferor’s estate if the insured dies within three years of transferring ownership. Additionally, if the grantor retains certain incidents of ownership or control, the policy may still be included in the estate for tax purposes. Proper timing and structuring of the transfer are therefore essential to achieve the intended tax treatment. Because estate tax exposure depends on overall estate valuation and specific circumstances, each situation should be reviewed to determine whether an ILIT will provide meaningful tax advantages. Coordination with other elements of the estate plan, accurate documentation of gifts used to fund premiums, and adherence to timing rules reduce the risk of unintended estate inclusion.
Premiums for a policy owned by an ILIT are commonly paid by the grantor through gifts to the trust, which the trustee then uses to pay the insurer. These gifts should be documented and may be structured as annual gifts that qualify for the annual gift tax exclusion. Proper documentation and communication with beneficiaries are important, particularly if the trust is relying on Crummey withdrawal powers to make gifts present interest qualifying for the annual exclusion. Alternatives include having the trust purchase a new policy and making initial funding transfers to the trust, or using other funding mechanisms agreed upon at the time of establishment. Clear record-keeping of all premium funding helps preserve the intended tax and administrative benefits, and clients should consider periodic reviews to confirm funding remains sufficient to maintain the policy.
Selecting a trustee for an ILIT requires balancing trustworthiness, availability, and administrative capability. A trustee will manage the policy, handle premium payments, file claims, and make distributions according to the trust terms. Some clients choose a trusted family member or friend who understands the family’s dynamics, while others prefer a corporate trustee or a hybrid arrangement to ensure continuity and professional administration. The trustee should be comfortable with fiduciary duties and record-keeping requirements. It is wise to appoint successor trustees and include clear trustee powers in the trust document to avoid uncertainty or disputes later. Trustee provisions can specify discretionary powers, investment authority, and guidelines for distributions. Discussing trustee expectations in advance with the chosen individual or entity helps prevent misunderstandings and smooths the administration when the time comes.
Yes, an ILIT can be tailored to provide for minor children or beneficiaries who require protection due to disability or other needs. The trust document can set age-based distribution schedules, provide for education expenses, and specify ongoing support while protecting assets from claims. When beneficiaries are receiving public benefits, the trust language can be coordinated with special needs planning to preserve eligibility for those benefits while providing supplemental support from trust funds. Designing the trust with clear instructions for how funds are to be used and distributed reduces the risk of mismanagement and ensures that resources are preserved for long-term care or support needs. Consulting about guardianship nominations and complementary documents like a pour-over will or special needs trust helps create a comprehensive plan that protects vulnerable beneficiaries and coordinates coverage across different planning tools.
If the insured dies within three years of transferring a policy to an ILIT, federal tax rules may include the value of the policy in the insured’s estate, which could reduce or eliminate the intended tax advantage. This three-year rule is an important timing consideration when transferring ownership of an existing policy into a trust. Planning around this period may involve alternative strategies, such as purchasing a new policy in the name of the trust or waiting until the three-year period has passed when possible. Even if estate inclusion occurs under these rules, the trust may still provide benefits in terms of controlled distributions and creditor protection for beneficiaries. Discussing timing and alternative approaches during the planning stage helps clients select the best path to meet family goals and to mitigate the risk of unintended estate inclusion.
An ILIT should be integrated with wills, living trusts, powers of attorney, and beneficiary designations to avoid conflicting instructions. For example, beneficiary designations on retirement accounts or other policies should be reviewed so they do not inadvertently override trust objectives. A pour-over will may be used in conjunction with a living trust to capture assets, while advanced directives and guardianship nominations address care and decision-making in other circumstances. Coordination is especially important when managing incidents of ownership that could affect estate inclusion or when ensuring that distributions are handled according to the grantor’s overall wishes. Regular review of all documents keeps the plan aligned and reduces the likelihood of disputes between beneficiaries and fiduciaries.
Gifts made to an ILIT to fund premium payments can have gift tax implications and should be documented. Many grantors use the annual gift tax exclusion to make recurring premium gifts that qualify as present interest gifts, often by employing Crummey withdrawal powers to convert gifts into present interest for exclusion purposes. Accurate record-keeping and compliance with reporting requirements are key to maintaining the intended treatment for these gifts and ensuring that they do not create unexpected tax liabilities. When gifts exceed annual exclusion limits, gift tax returns may be required, and clients may need to consider lifetime exemption amounts and reporting obligations. We assist with documenting gifts and advising on reporting obligations so that funding the trust supports the intended tax and estate planning outcomes.
Yes, an ILIT can own a policy purchased after the trust is formed, and in some cases this is the preferred method to avoid the three-year transfer rule that can apply when existing policies are transferred. When a trust purchases a new policy, the trust is the initial owner and beneficiary, which can simplify the funding and ownership structure. This approach requires appropriate initial funding to the trust so that it can pay the policy premiums and maintain the coverage over time. Purchasing a new policy through the trust also allows the grantor to plan the funding method and to set up gift mechanisms to support premiums. The trust document should clearly authorize policy ownership and provide trustee powers to manage the policy, make premium payments, and administer proceeds when a claim is made.
Periodic review of an ILIT and the broader estate plan is recommended after major life events, significant changes in assets, or shifts in family structure. Events such as births, marriages, divorces, deaths, or changes in asset values may require updates to trustee appointments, funding arrangements, or distribution provisions. Regular reviews ensure that the trust continues to reflect current intentions and operates effectively within the overall estate plan. In addition to event-driven reviews, a scheduled review every few years helps confirm that premium funding remains sustainable, trustees remain willing and able to serve, and that documents comply with current law. These reviews reduce the likelihood of unintended results and help maintain the coherence of your estate planning strategy over time.
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