An Irrevocable Life Insurance Trust (ILIT) can be a powerful tool for preserving life insurance proceeds for beneficiaries while helping manage estate tax exposure and ensuring assets are distributed as intended. At the Law Offices of Robert P. Bergman in San Jose, we help clients in Seven Trees understand how an ILIT works, who should consider one, and what steps are involved in creating and funding the trust. This introduction outlines the purpose and basic mechanics of an ILIT and sets expectations for planning, administration, and coordination with other estate documents like wills and powers of attorney.
Establishing an ILIT involves legal documents and ongoing administration to ensure life insurance benefits pass outside your taxable estate and reach your chosen beneficiaries according to your wishes. In addition to drafting the trust document, the process typically includes naming trustees, transferring ownership or creating new policies owned by the trust, and setting provisions for distributions. This paragraph explains why careful drafting and coordination with your financial and tax advisors matter, and how a thoughtful ILIT can support family security, charitable goals, or targeted asset protection strategies over the long term.
An ILIT provides several benefits for individuals who want to control life insurance proceeds and potentially reduce estate tax exposure. When properly structured, the ILIT holds the policy outside the insured’s taxable estate, which may preserve a larger portion of the death benefit for beneficiaries. It also creates a dedicated vehicle for payout administration, allowing the grantor to define how proceeds are used, whether for income replacement, paying estate expenses, funding education, or supporting dependents with special needs. The trust can offer creditor protection for beneficiaries and can be tailored to align with broader estate planning goals and family circumstances.
The Law Offices of Robert P. Bergman in San Jose focuses on practical, client-centered estate planning solutions for residents of Seven Trees and surrounding communities. Our approach emphasizes clear communication, thoughtful drafting, and coordination with clients’ financial advisors to ensure ILITs integrate smoothly with wills, trust portfolios, retirement plan trusts, and other estate planning documents. We prioritize understanding family goals, timelines, and tax considerations so that each ILIT is structured to reflect the client’s priorities while minimizing administrative burdens for trustees and beneficiaries after the grantor’s passing.
An ILIT is a trust designed to own a life insurance policy for the benefit of named beneficiaries. By transferring ownership of an existing policy to the trust or by having the trust purchase a new policy, the death benefit can be excluded from the insured’s probate estate if the transfer is completed and timed correctly. The trust document sets the terms for how proceeds are distributed, who serves as trustee, and what powers trustees have. Understanding the distinctions between revocable and irrevocable arrangements and the timing rules under tax law is essential before proceeding with an ILIT.
Creating an ILIT requires attention to administrative details such as gifting funds to the trust to pay insurance premiums, managing Crummey withdrawal notice requirements when gifts to the trust qualify for the gift tax annual exclusion, and documenting transfers when necessary. Trustees will be responsible for accepting ownership of a policy, maintaining records, and following distribution instructions at the time of death. Understanding these responsibilities and operational steps helps clients decide whether an ILIT aligns with their tax planning, family goals, and desire for post-death control of insurance proceeds.
An ILIT is an irrevocable trust created primarily to hold life insurance policies. Once established, the grantor generally transfers ownership of a policy to the trust or causes the trust to acquire a new policy. Because the trust owns the policy and not the grantor, the policy proceeds may pass outside probate and not be counted in the grantor’s taxable estate for estate tax purposes, depending on timing and transfer rules. The trust instrument outlines distribution rules, trustee powers, and provisions for premium payments, which can be structured to meet family needs and tax objectives while preserving flexibility where feasible within the limits of an irrevocable arrangement.
Setting up an ILIT typically involves drafting a trust agreement, naming trustees and beneficiaries, and transferring or issuing a life insurance policy owned by the trust. The grantor must consider premium funding strategies, which often include gifting cash to the trust for premium payments and complying with gift tax rules. Trustee responsibilities include policy administration, recordkeeping, and carrying out distribution instructions upon the insured’s death. Coordination with financial and tax advisors helps ensure proper titling and compliance with IRS rules that could affect the tax treatment of the policy proceeds.
This glossary provides plain-language explanations of terms commonly used when planning an ILIT and related estate documents. Understanding these definitions makes it easier to participate in planning decisions, review trust provisions, and follow the administrative steps required for premium funding and trust maintenance. The glossary covers concepts such as grantor, trustee, beneficiary, Crummey power, gift tax annual exclusion, probate, and pour-over wills, among others. Clear definitions help clients prepare for meetings and ensure that their ILIT functions as intended within a broader estate plan.
The grantor is the person who creates and funds the trust. In the context of an ILIT, the grantor typically transfers ownership of a life insurance policy to the trust or makes gifts to the trust so it can purchase and maintain a policy. Once assets are placed into an irrevocable trust, the grantor generally gives up direct control over those assets according to the trust terms. Understanding the grantor’s role and the implications of transferring policy ownership is important for meeting tax and administrative requirements and for ensuring the trust serves the grantor’s estate planning goals.
A Crummey power refers to a limited withdrawal right provided to beneficiaries of a trust to make gifts to the trust qualify for the annual gift tax exclusion. When the trust provides notice to beneficiaries that a gift was made and temporarily allows them to withdraw that gift, the IRS may treat the contribution as a present interest, making it eligible for the annual exclusion. Proper timing and documentation of Crummey notices, along with trustee administration of withdrawal rights, are important to ensure premium gifts are treated as excluded from gift tax when applicable.
The trustee is the individual or institution responsible for managing the trust’s assets according to the terms set out in the trust document. For an ILIT, trustee duties often include owning the insurance policy on behalf of the trust, receiving premium gifts, paying premiums, maintaining records, and distributing proceeds when the policy pays out. Trustees have fiduciary obligations to beneficiaries and must follow the trust’s instructions while exercising reasonable care in administration. Selecting a trustee who will follow the grantor’s wishes and administer the trust responsibly is an important planning decision.
A pour-over will is a will that directs any assets not already placed in a trust during the grantor’s lifetime to be transferred into a designated trust at death. It is commonly used alongside revocable living trusts and other estate planning documents to ensure assets not previously titled to the trust will be gathered and managed under the trust’s terms. While an ILIT is separate and typically irrevocable, a pour-over will can help consolidate estate administration and ensure consistent treatment of assets according to the client’s broader intentions.
When evaluating how to hold life insurance, clients often compare owning a policy personally, titling a policy to a revocable trust, or establishing an irrevocable life insurance trust. Owning a policy personally can provide flexibility but may expose proceeds to estate inclusion and creditor claims. A revocable trust does not usually remove the policy from the estate for tax purposes if the insured retains incidents of ownership. An ILIT is designed to limit estate inclusion by removing ownership, though it requires relinquishing certain controls and following transfer rules. Assessing family needs, tax considerations, and desired control helps determine the best choice.
In some situations, retaining personal ownership of a life insurance policy and carefully updating beneficiary designations can be a suitable approach. This option maintains flexibility for the policyholder to change coverage or beneficiaries and to access policy values if needed. It may be appropriate for smaller estates where estate tax concerns are minimal or where immediate access to cash value is important. However, it does not provide the probate avoidance or potential estate tax benefits of an ILIT, and beneficiaries may face creditor or marital claims depending on circumstances.
Placing a life insurance policy into a revocable living trust may help streamline probate administration but generally will not remove the policy from the insured’s estate for federal estate tax purposes if the insured retains ownership rights. This option can suit clients who want centralized asset management and easier administration at death while maintaining the ability to modify trust terms during lifetime. For those whose primary concern is probate process or centralized document management rather than estate tax exclusion, a revocable trust approach can be adequate.
A comprehensive planning approach ensures transfers, premium funding, and beneficiary designations align with applicable tax rules and timing requirements. For example, transfers of existing policies to an ILIT may be subject to a three-year rule for estate inclusion, and gifts intended to fund premiums need proper treatment to qualify for the annual gift tax exclusion. Comprehensive planning coordinates these technical aspects with broader estate goals, reducing the risk of unintended tax consequences and ensuring the trust performs as intended for beneficiaries when the insured passes.
ILITs do not operate in isolation, so integrating them with wills, revocable living trusts, powers of attorney, and retirement plan designations is important to avoid conflicts and gaps. A comprehensive approach includes reviewing existing estate documents, retirement accounts, and beneficiary designations to ensure consistency. Coordination with financial advisors helps address funding strategies, premium payment mechanisms, and potential cash flow needs. This integration reduces ambiguity for trustees and beneficiaries and simplifies administration after the grantor’s death, supporting a smoother transition of benefits according to the grantor’s intentions.
A comprehensive approach offers clarity, tax efficiency, and practical administration benefits. By aligning the ILIT with other estate planning documents and financial arrangements, clients can reduce the likelihood of unintended estate inclusion, clarify funding methods for premiums, and set clear distribution instructions for beneficiaries. Trustees will also have access to consistent guidance about how to manage proceeds, pay expenses, and carry out the grantor’s wishes. A well-coordinated plan helps reduce disputes, administrative delays, and the potential for costly litigation after the insured’s death.
Comprehensive planning can also address contingencies such as disability, changes in family composition, or the need for special trust provisions for beneficiaries with unique circumstances. By considering backup trustee arrangements, distribution triggers, and interaction with other tax planning vehicles, clients can create a durable plan that adapts to foreseeable changes. This foresight often results in more predictable outcomes for survivors and preserves the intended benefits of life insurance proceeds for the people and purposes the grantor intended to support.
One major benefit of a comprehensive ILIT strategy is potential reduction in estate tax exposure through careful ownership and timing decisions. When executed with proper documentation and adherence to transfer rules, the ILIT can prevent the insurance death benefit from being included in the taxable estate. This can preserve more value for beneficiaries and reduce estate settlement burdens. Achieving those results requires careful drafting of trust terms, accurate funding procedures, and proactive coordination with advisors to avoid pitfalls that might cause estate inclusion or unintended tax treatment.
An ILIT allows the grantor to set clear parameters for how life insurance proceeds are used and when beneficiaries receive funds. The trust can specify conditions, timelines, or staged distributions that reflect family needs and the grantor’s intentions, offering protections against mismanagement or creditor claims against beneficiaries. The trustee’s responsibilities and powers can be tailored to ensure prudent handling of proceeds, provide for young beneficiaries, or address the needs of those with disabilities. Thoughtful distribution provisions help translate the grantor’s wishes into practical support for loved ones.
Begin ILIT planning by reviewing all existing estate documents, beneficiary designations, and life insurance policies to ensure cohesive treatment. Coordination reduces surprises and helps identify whether existing policies should be transferred or whether a new policy should be issued to the trust. Discuss premium funding strategies and the timing of transfers to avoid unintended estate inclusion. Clarify trustee duties and communicate with family members where appropriate so the trust can be administered smoothly in the future without unnecessary disputes or delays.
Select a trustee who understands fiduciary responsibilities and is willing to follow the trust terms, and name backup trustees to handle unexpected events. Trustee selection affects how the trust is administered, how premiums are paid, and how proceeds are distributed after death. Consider whether a family member, trusted advisor, or institutional trustee is most appropriate given the complexity of administration and the needs of beneficiaries. Clear guidance in the trust document about trustee powers and compensation helps avoid disputes and ensures consistent administration.
Consider an ILIT if you want life insurance proceeds to pass outside your probate estate, seek to manage potential estate tax implications, or wish to direct how proceeds are used and distributed to heirs. An ILIT can be particularly useful when a family needs liquidity to pay estate expenses or support dependents without exposing proceeds to probate or certain claims. It can also preserve benefits for beneficiaries with special needs by tailoring distribution language. Evaluating family goals, asset structure, and potential tax exposure helps determine whether an ILIT fits into a broader estate plan.
An ILIT may also be appropriate for clients with larger life insurance holdings, blended family situations where control over distributions matters, or those seeking to leave funds to charity while managing tax impacts. If the goal is creditor protection for beneficiaries or to prevent proceeds from being swept into probate, an ILIT offers a means to achieve those outcomes when carefully drafted and funded. A thorough review of current policies, financial ability to fund premiums, and coordination with retirement and trust planning should guide the decision-making process.
Clients frequently establish ILITs in circumstances such as multi-million dollar life insurance holdings, desire to reduce estate tax exposure, need to protect proceeds from creditors or divorce, or when specific distribution control is needed for heirs. Other reasons include funding business succession plans, providing liquidity for estate settlement costs, or establishing charitable giving arrangements funded by life insurance. Each situation requires tailored trust provisions to reflect the grantor’s priorities, so careful planning and document drafting are important to achieve the intended outcomes.
Individuals with large life insurance policies often use an ILIT to keep the death benefit out of their taxable estate, subject to the applicable transfer timing rules. This planning helps preserve the full value of the benefit for intended beneficiaries and can reduce estate tax liabilities when combined with broader tax planning. Proper timing of transfers and consistent premium funding are important, and clients should consider how the ILIT coordinates with retirement account designations and other estate assets to achieve tax-efficient results.
An ILIT can be structured to provide safeguard provisions for beneficiaries who may have special needs, spendthrift tendencies, or creditor exposure. The trust document can set distribution schedules, conditions, or trust managers to oversee funds on behalf of beneficiaries who require support without direct access to lump sums that could jeopardize long-term stability. These measures help ensure that life insurance proceeds serve their intended protective or support purposes while reducing the risk of misuse or loss to creditors.
Business owners may use an ILIT to hold key-person or buy-sell life insurance policies to provide liquidity for business succession, to purchase a departing owner’s interest, or to fund ongoing obligations after the owner’s death. The ILIT ensures that proceeds are available to the business or designated beneficiaries according to predetermined rules, helping stabilize transitions and reduce disruptions. Trust provisions and coordination with business agreements should be designed to align the life insurance vehicle with the owner’s succession plan and liquidity requirements.
The Law Offices of Robert P. Bergman serves residents of Seven Trees and the greater San Jose area with ILIT formation, funding guidance, and trustee support. We assist clients in evaluating whether an ILIT meets their goals, drafting trust documents that reflect individual priorities, and coordinating premium funding and beneficiary arrangements. Our local service includes practical counsel on California law considerations and helping clients navigate interactions with other estate planning components so their ILIT functions as intended when the time comes for administration and distribution.
The Law Offices of Robert P. Bergman provides careful, client-focused estate planning services tailored to the needs of families and business owners in Seven Trees and San Jose. We prioritize clear communication and thorough document drafting so that each ILIT aligns with the client’s objectives and coordinate with other trusts, wills, and beneficiary designations. Our approach includes reviewing existing policies, recommending funding techniques, and documenting trustee powers and distribution instructions to minimize ambiguity and administrative burdens for those left to manage trust matters in the future.
Clients benefit from a process that emphasizes practical problem-solving and attention to detail. We help clients consider timing issues, gift tax implications, and interactions with retirement accounts and other estate planning vehicles. Our work includes drafting Crummey notice provisions when appropriate, advising on trustee selection, and preparing the paperwork needed to transfer policy ownership or have the trust acquire new coverage. The goal is to deliver a durable arrangement that serves the client’s long-term desires for family protection and orderly transfer of assets.
We also provide guidance for trustees and beneficiaries to ensure smooth administration after the insured’s death. That includes clear instructions for documenting premium payments, handling policy claims, and distributing proceeds under the trust’s terms. Our firm helps clients anticipate common administration issues and build flexibility into trust documents where appropriate, while maintaining the certainty needed to preserve tax treatment and protect beneficiaries. Ongoing communication and client education are part of the service to reduce surprises and promote confidence in the plan.
Our process begins with a detailed intake to understand family dynamics, existing policies, and estate objectives. We then recommend whether an ILIT is appropriate and outline funding strategies such as gifting arrangements or trust-owned policies. Drafting and review follow, during which we prepare the trust instrument, coordinate any required policy transfers, and advise on beneficiary notices and documentation. Once the ILIT is established, we advise on recordkeeping and trustee duties so the trust can be administered smoothly when necessary, minimizing complications for heirs.
During the initial review, we gather information about current life insurance policies, financial accounts, family structure, and the client’s goals for distribution and tax considerations. We discuss policy ownership options, potential gift funding methods, and the interplay with other estate planning documents. This stage includes evaluating whether existing policies should be transferred to the ILIT or whether new coverage should be issued in the name of the trust. It sets the foundation for the recommended trust structure and funding approach.
Collecting policy statements, beneficiary forms, account summaries, and prior estate documents is essential so we can assess the current situation and create a cohesive plan. Documentation helps determine titling changes needed, whether transfers trigger timing rules, and how premium payments might be funded. By reviewing these materials early, we can identify issues that require coordination with financial advisors or insurance carriers and ensure the ILIT is designed to work smoothly with the client’s broader financial picture.
We will discuss the client’s priorities for how life insurance proceeds should be used, whether for family support, debt repayment, business transition, or charitable gifts. Understanding beneficiary needs allows us to craft distribution provisions that address age considerations, special needs, creditor protection, or staged distributions. Clear goals inform trustee selection and the trust’s administration plan, ensuring the final trust document reflects practical directions for managing and distributing proceeds according to the client’s intentions.
After gathering information and agreeing on objectives, we draft the ILIT document tailored to the client’s instructions. The drafting process includes defining trustee powers, distribution terms, premium funding mechanisms, and any special provisions such as Crummey notice procedures. We review the draft with the client, make revisions as needed, and guide the execution process to ensure the trust is properly signed and funded. Accurate execution and timely funding are essential to achieve the intended estate and tax outcomes.
Trust provisions are tailored to reflect how and when proceeds will be distributed, what limitations or conditions apply, and how trustees should manage investments and claims. Defining trustee powers—such as authority to pay premiums, invest trust assets, or make discretionary distributions—helps avoid ambiguity. Thoughtful drafting balances the need for control with administrative flexibility so trustees can respond effectively to beneficiary needs while following the grantor’s instructions.
Execution involves signing the trust, transferring ownership of existing policies if appropriate, and establishing funding mechanisms to cover premiums. If funding is accomplished through annual exclusion gifts, the trust should include appropriate notice procedures and records to support the tax treatment. We assist clients with required paperwork, coordinate with insurance carriers for ownership changes, and advise on recordkeeping to ensure that the trust meets its intended goals and administrative requirements.
Ongoing administration includes paying premiums, maintaining records, sending Crummey notices when necessary, and preparing to handle claims and distributions after the insured’s death. Trustees must manage documentation, respond to beneficiary inquiries, and follow the trust’s distribution instructions. We provide guidance to trustees on their duties and obligations and can assist with administrative steps to maintain the trust’s intended tax and legal status. Proactive administration helps avoid errors that could undermine the trust’s benefits.
Reliable premium funding arrangements and meticulous recordkeeping are key to preserving the ILIT’s purpose. Trustees should track gifts to the trust, receipts of premium payments, notice deliveries, and any communications with insurance carriers. Proper records support tax positions and provide transparency to beneficiaries, making administration smoother when proceeds become payable. We advise clients and trustees on best practices for documenting transactions and maintaining a clear paper trail for trust activities.
When a policy pays proceeds, the trustee must file claims, collect benefits, and distribute funds according to the trust terms. This stage involves communicating with insurers, submitting required documentation, and following distribution instructions while managing any tax reporting or estate settlement responsibilities. Trustees may need legal guidance to interpret trust provisions, coordinate with other estate administrators, and resolve beneficiary questions. We work with trustees at this stage to ensure claims are processed and distributions made in a timely, documented manner.
An ILIT is an irrevocable trust created specifically to own and manage life insurance policies for the benefit of named beneficiaries. The trust holds the policy so that the death benefit is paid to the trust rather than directly to the insured or the insured’s estate. This structure can keep proceeds out of probate and may prevent certain estate inclusion issues when transfers and timing are handled correctly. The trust document sets the terms for who receives distributions, when they are paid, and how the trustee should manage the funds. Creating and funding an ILIT involves drafting the trust agreement, selecting trustees and beneficiaries, transferring or issuing the policy in the trust’s name, and establishing premium funding procedures. For funding through gifts, notice and recordkeeping procedures like Crummey notices are often used to preserve gift tax annual exclusion treatment for contributors. Trustees are responsible for managing the policy, paying premiums, and carrying out distribution instructions at the time the policy proceeds are received.
Transferring an existing policy to an ILIT may be advantageous when the goal is to remove the death benefit from your taxable estate, but the timing of that transfer is important. Under current rules, transfers made within a specified period prior to death may still result in estate inclusion, so clients should consider how long ago the transfer would occur and whether the transfer aligns with broader estate tax planning objectives. Reviewing the policy’s surrender value, premium obligations, and any outstanding loans is also essential before transferring ownership. If an existing policy is transferred, the trust must be able to pay future premiums and meet administrative obligations. Sometimes it is better to have the ILIT acquire a new policy owned by the trust rather than transferring a high cash-value policy, depending on the client’s financial circumstances and tax planning goals. Our firm helps evaluate those options and advise on the best path given the client’s priorities.
Premiums for an ILIT are often funded through gifts to the trust made by the grantor or other contributors. To utilize the annual gift tax exclusion, the trust may include provisions for temporary beneficiary withdrawal rights, commonly referred to as Crummey powers, which can make the premium gifts qualify as present interest gifts. Donors should keep careful records of gifts, notices, and trustee actions to support the tax treatment and maintain compliance with IRS rules. Alternatively, if the grantor has sufficient liquidity, periodic transfers to the trust or other funding mechanisms can be arranged to ensure premiums are paid on time. The trustee must manage these funds prudently and document each premium payment and any notices given to beneficiaries. Coordination with financial advisors can help ensure sustainable funding and compliance with gifting strategies.
A Crummey notice is a written communication informing trust beneficiaries that a gift was made to the trust and that they have a limited time to withdraw that gift. When properly implemented, this notice can convert a gift into a present interest, making it eligible for the annual gift tax exclusion. The notice procedure and the trust’s withdrawal terms must be carefully drafted and followed to ensure the intended tax benefits are preserved and to prevent administrative disputes among beneficiaries. Trustees must document that notices were sent and whether any beneficiary exercised the withdrawal right. While beneficiaries rarely exercise these short-term withdrawal rights, the existence and proper administration of the Crummey mechanism are important to support the gift tax treatment and to provide a defensible record in the event of future inquiry.
Choosing a trustee involves balancing trustworthiness, administrative ability, and willingness to serve. Family members are often trustees when they are capable and willing to handle administrative tasks, but some clients prefer professional trustees or co-trustee arrangements when administration may be complex. The trustee will be responsible for managing premium payments, maintaining records, filing claims, and distributing proceeds according to the trust terms, so selecting someone who can manage those duties reliably is important. Naming successor trustees and providing clear instructions in the trust document helps ensure continuity in administration. Trustee compensation, decision-making authority, and guidelines for interacting with beneficiaries should be set out in the trust to reduce uncertainty. We advise clients on trustee options and draft provisions that reflect the desired balance of control and practical administration.
An ILIT may help reduce estate taxes by removing the life insurance policy from the grantor’s taxable estate when the policy is owned by the trust and transfers are completed outside of disallowed timing windows. When the trust owns the policy and the grantor does not retain incidents of ownership, the death benefit can pass to beneficiaries free of estate inclusion, subject to applicable estate tax laws. Proper timing and structuring of transfers and premium funding are necessary to achieve the intended tax results. Estate tax planning is complex and depends on the size of the taxable estate and current tax law. A comprehensive review of assets, beneficiary designations, and other trusts is important when deciding whether an ILIT is an appropriate vehicle for tax planning. We assist clients in evaluating tax implications and coordinating ILIT strategies with other planning tools to support their objectives.
An ILIT interacts with retirement account designations in that retirement accounts normally pass according to beneficiary designations rather than trust documents. If the goal is to coordinate life insurance proceeds with retirement account distributions, it is important to design beneficiary designations and trust provisions that work together. For example, naming a trust as a retirement account beneficiary can have tax implications and requires careful drafting to ensure required minimum distributions and other rules are handled appropriately. Consultation with retirement and tax advisors is often necessary to align retirement account beneficiary designations with ILIT planning. Coordination helps avoid unintended tax consequences and ensures that all assets are distributed in a manner consistent with the grantor’s overall estate plan and objectives for beneficiary support.
If a trustee grants beneficiaries withdrawal rights or the trust document permits distributions under certain conditions, a beneficiary may be able to access funds as provided by the trust. The trust’s terms determine whether withdrawals are a regular right or a limited opportunity intended to qualify gifts for tax exclusion. Trustees must follow the trust document carefully and evaluate any withdrawal requests in light of fiduciary duties and the grantor’s stated objectives for the trust. When withdrawal rights are temporary and part of a Crummey notice procedure, beneficiaries commonly do not exercise them. If a beneficiary seeks distribution for hardship or other reasons, the trustee must review the trust language and act in accordance with the trust’s standards for discretionary distributions. Trustees may seek legal guidance for complex decisions to ensure compliance with the document and applicable law.
Once an ILIT is executed and funded, it is generally irrevocable and cannot be changed or revoked by the grantor. This permanence is what enables the trust to achieve certain tax and asset protection objectives. Because of this, creating an ILIT requires careful consideration of long-term goals, beneficiary needs, and funding strategies before execution and funding occur. Clients should be certain that the ILIT reflects their intentions and should seek to coordinate the trust with their overall estate plan. In limited circumstances, certain modifications may be possible through trust amendment provisions, decanting under state law, or court-approved modifications, but these approaches can be complex and may not preserve the trust’s intended tax treatment. It is therefore important to plan carefully and anticipate foreseeable changes before establishing an irrevocable trust.
To begin the process of creating an ILIT with our firm, contact the Law Offices of Robert P. Bergman to schedule a consultation where we will gather information about your policies, estate goals, and family circumstances. During the consultation we review options for trust structure, funding, and trustee selection. We will also outline the steps involved, anticipated costs, and coordination needed with your financial and insurance advisors to implement the plan effectively. After the initial meeting we prepare a draft trust tailored to your instructions, review it with you for revisions, and guide execution and funding. We can assist with communications to beneficiaries, ownership transfers with insurance carriers, and ongoing trustee guidance so the ILIT operates as intended when administration is required.
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