An Irrevocable Life Insurance Trust (ILIT) can be a powerful estate planning tool for Kenwood residents who wish to remove life insurance proceeds from their taxable estate while providing liquidity for heirs. This page explains how an ILIT works, what elements should be considered when creating one, and practical steps people commonly take to align life insurance with broader estate and legacy goals. We discuss trustee responsibilities, funding the trust, and common companion documents so you can make an informed choice about whether an ILIT fits within your overall estate planning objectives in Sonoma County.
Choosing to create an ILIT involves careful planning around ownership, gifting, and timing to meet legal and tax objectives. An ILIT is generally established to hold a life insurance policy outside the grantor’s estate, providing heirs with immediate funds at death for taxes, debts, or other needs. This guide outlines typical trust provisions, the role of beneficiaries, and practical considerations such as Crummey withdrawal notices, trustee selection, and ongoing administration. The goal is to present clear information so you understand how an ILIT can integrate with wills, revocable trusts, and powers of attorney in California.
An ILIT can preserve family wealth by keeping life insurance proceeds outside the grantor’s probate and taxable estate, offering quicker access to funds for beneficiaries. It helps ensure designated uses for proceeds, such as paying estate taxes, settling debts, maintaining a family business, or funding education and care. An ILIT may also protect proceeds from certain creditor claims and provide a structured distribution schedule that aligns with a grantor’s intentions. For many families in Kenwood and Sonoma County, this structure provides both financial peace of mind and practical liquidity at a difficult time.
Law Offices of Robert P. Bergman assists clients with estate planning matters across California, including creation and administration of ILITs tailored to each family’s needs. Our approach focuses on understanding client goals, coordinating life insurance planning with overall estate documents, and advising on trustee duties and funding methods. We work closely with financial advisors and insurance providers to implement practical solutions. Communication is centered on clear options and predictable administration so clients feel confident in how their life insurance arrangements will support their intended outcomes for heirs and legacy purposes.
An ILIT is a trust that owns one or more life insurance policies and is designed to be irrevocable so that policy proceeds are not included in the grantor’s taxable estate. Establishing an ILIT typically involves naming trustees, beneficiaries, and specifying how and when proceeds should be distributed. The grantor transfers an existing policy or directs premiums be paid into the trust, often using annual gifts that qualify for the gift tax exclusion. The trust document can include liquidity provisions, distribution conditions, and instructions for ongoing administration to achieve the grantor’s financial and familial objectives over time.
Key parties in an ILIT include the grantor who establishes the trust, the trustee who manages the trust and the insurance policy, and the beneficiaries who receive proceeds at the grantor’s death. Trustees must follow the trust terms, manage premium payments, provide required notices to beneficiaries when gifts are made, and coordinate with insurance companies. Considerations such as naming a successor trustee, defining permissible uses for proceeds, and ensuring consistent funding are important for the trust to operate smoothly. Careful drafting and administration can help avoid unintended tax consequences and ensure the trust carries out its intended purpose.
An ILIT is a legal arrangement where a trust, rather than an individual, owns a life insurance policy. Because the trust is irrevocable, the policy’s death benefit generally will not be counted in the grantor’s estate for estate tax purposes, provided legal requirements are met. The trust sets out rules for premium funding, distributions, and management of the policy and proceeds. The trustee handles administrative duties and ensures that beneficiary designations align with the trust terms. This structure provides a reliable mechanism to deliver cash to beneficiaries outside probate and according to the grantor’s instructions.
Creating an ILIT involves drafting a trust agreement, transferring ownership or arranging premium payments, appointing a trustee, and setting beneficiary terms. Important administrative tasks include providing annual gift notices when beneficiaries have withdrawal rights, maintaining records of premium payments, and ensuring the trust satisfies tax and legal formalities. The trustee is responsible for interacting with the insurance company, investing any trust assets, and distributing proceeds according to the trust’s instructions. Regular reviews ensure the ILIT continues to meet changing family or financial circumstances.
Understanding the terminology used with ILITs helps clients make informed choices about structure and administration. Terms frequently encountered include grantor, trustee, beneficiary, Crummey power, gift tax exclusion, probate, and includible estate. Clarity around these definitions reduces confusion during setup and later administration and helps ensure that trust funding, beneficiary notices, and ownership transfers are completed correctly. Below we provide concise definitions and practical notes on how each term affects the creation and operation of an ILIT in California.
The grantor is the person who creates and funds the ILIT by transferring ownership of a life insurance policy or making gifts to the trust to pay premiums. The grantor’s actions determine whether the insurance proceeds will be included in their estate for tax purposes, so timing and transfer mechanics matter. Properly funding and documenting gifts to the trust, and avoiding retained incidents of ownership, are essential to achieve the intended estate and tax outcomes. The grantor can establish provisions about how proceeds should be used and name beneficiaries who will receive distributions.
The trustee administers the ILIT, manages the insurance policy and trust assets, and follows the distribution instructions in the trust document. Duties include ensuring premiums are paid, keeping records, sending required notices to beneficiaries when gifts are made, and filing necessary tax returns for the trust. Trustees should act in accordance with the trust terms and applicable law, coordinating with financial and legal advisors as needed. A prudent trustee helps avoid administrative errors that could jeopardize the trust’s tax benefits or intended distributions to beneficiaries.
A Crummey right is a temporary withdrawal right granted to beneficiaries that allows annual gifts to the ILIT to qualify for the annual gift tax exclusion. The trustee gives beneficiaries notice of their limited power to withdraw a portion of each gift for a short period. When beneficiaries do not exercise the withdrawal right, the funds remain in the trust to pay premiums. Properly drafted and administered Crummey notices are commonly used to preserve the intended tax treatment of gifts to the ILIT while enabling ongoing premium funding.
If the grantor retains certain rights or incidents of ownership over the life insurance policy, the policy proceeds may be included in the grantor’s taxable estate. Common pitfalls include retaining the right to change beneficiaries, revoking the trust, or retaining a power to assign policy rights. Ensuring the trust is irrevocable and that ownership has truly been transferred away from the grantor—and avoiding retained powers—are essential to prevent includibility. A careful review of policy ownership and trustee duties helps confirm the intended estate planning outcome is achieved.
An ILIT offers specific benefits compared with other approaches to life insurance ownership, such as retaining a policy personally or naming beneficiaries directly. An ILIT can keep proceeds out of probate and the taxable estate, allow for controlled distributions, and reduce the likelihood of creditor claims reaching the proceeds. Alternatives like revocable trusts provide flexibility but typically do not remove proceeds from the taxable estate while the grantor is alive. Choosing between options depends on goals related to tax planning, creditor protection, control over distributions, and the desire to provide immediate liquidity to heirs.
For households with modest estates and straightforward needs, simply maintaining a life insurance policy owned personally with beneficiaries named directly may be sufficient. If anticipated estate taxes and creditor exposure are minimal, the administrative complexity of an ILIT may not be necessary. In these situations, the primary focus is on ensuring beneficiary designations are current and aligned with broader estate documents. Simpler ownership approaches can deliver funds quickly to beneficiaries but may not provide the same protections against estate inclusion or creditor claims that a trust would provide.
If the primary objective is immediate liquidity and there are no concerns about taxing or creditor exposure, direct designations can be effective. This path avoids the need for a trustee to administer the policy and reduces paperwork associated with trust management. It is often chosen by individuals who want straightforward access to proceeds upon death without additional trust-related notifications or annual administration. Yet this approach offers less control over how funds are used and may expose proceeds to probate or estate tax considerations in larger estates.
A comprehensive approach such as an ILIT is often appropriate when estate tax planning or wealth preservation is a priority. For individuals with estates that may face estate taxation or with beneficiaries who may need structured distributions, an ILIT allows proceeds to be managed outside the grantor’s estate and distributed per specific instructions. This approach helps ensure that funds are available to pay taxes or debts and can be tailored to provide for long-term care, education, or a family business, minimizing the risk that proceeds are consumed by settlement costs or divided contrary to the grantor’s wishes.
When protecting proceeds from potential creditor claims or providing controlled distributions to beneficiaries is important, an ILIT can be designed with spendthrift or distribution provisions that limit direct access and protect funds from creditors in many circumstances. The trust structure grants the trustee flexibility to follow the grantor’s distribution instructions while providing safeguards. Such features are often selected when heirs may face financial vulnerability, have special needs, or when the grantor wishes to stagger distributions over time to encourage responsible use of proceeds.
A thoughtfully drafted ILIT can provide clear advantages, including keeping policy proceeds out of probate, ensuring funds are available to satisfy estate obligations, and enabling controlled distribution to beneficiaries. These benefits often reduce family stress during settlement, preserve family assets for intended uses, and provide a formal mechanism to support long-term legacy planning. Because the trust holds the policy, the trustee can act quickly to secure proceeds and implement the grantor’s distribution objectives without waiting for probate to conclude.
Beyond tax and probate considerations, an ILIT allows a grantor to specify how proceeds should be handled should circumstances change. The trust can allocate funds for education, caregiving, charitable gifts, or business continuity. It also creates an opportunity to coordinate insurance with retirement and investment plans so that beneficiaries receive support aligned with broader family goals. Regular review and proper funding are important so that the trust remains effective and reflects evolving financial realities and family dynamics.
One of the most cited benefits of an ILIT is the potential to reduce estate tax exposure by keeping life insurance proceeds outside the grantor’s estate. Doing so may reduce the need to liquidate assets to pay estate taxes, allowing heirs to benefit from assets that might otherwise be sold. Removing proceeds from probate also speeds access for beneficiaries and reduces administrative burdens. This can be particularly valuable for property-rich households who require liquid funds to settle estate obligations without disrupting long-term investments or businesses.
An ILIT enables the grantor to set distribution terms that reflect family priorities, such as phased payouts, educational funding, or trust-protected inheritances. By specifying conditions and appointing a trustee to oversee distributions, the grantor can guard against misuse and provide for beneficiaries who may not be prepared to manage a large sum. These protections also help shield proceeds from certain creditor claims and ensure that the funds are used in ways that match the grantor’s intentions over time.
Before transferring a policy to an ILIT, verify current ownership and beneficiary designations to avoid unintended estate inclusion. Transferring ownership must be done carefully to ensure there are no retained incidents of ownership that could cause the death benefit to be included in the grantor’s estate. Coordination with the life insurance company and careful documentation of the transfer is important. Reviewing beneficiary designations and beneficiary coordination with the trust terms reduces the risk of conflicting instructions and ensures the trust functions as intended when benefits become payable.
Selecting a trustee with the ability to administer the trust, manage interactions with the insurance company, and follow distribution instructions is a key decision. The trustee should be someone trusted by the grantor and capable of maintaining clear records and sending required notices. Many choose a professional or institutional trustee for added continuity, while others designate a family member or trusted advisor. Regardless of the choice, providing clear guidance in the trust document and naming successor trustees helps ensure predictable administration over time.
Consider an ILIT when you want to secure liquidity for heirs while limiting the inclusion of life insurance proceeds in your taxable estate. This approach can be important for individuals with substantial assets, business interests, or real estate that may require funds at death to settle taxes, debts, or transition ownership. An ILIT may also be appropriate for those who want controlled distributions to heirs, protection against potential creditor claims, or a vehicle to ensure that life insurance proceeds are used in accordance with long-term plans rather than being distributed outright without oversight.
Another reason to use an ILIT is to coordinate life insurance with other estate planning documents to achieve cohesive results. When wills, revocable trusts, powers of attorney, and beneficiary designations are aligned with an ILIT, the overall plan is more likely to function smoothly at a time of loss. Individuals who wish to leave legacy gifts, provide for minors or vulnerable beneficiaries, or support charitable giving can structure an ILIT to accomplish those ends with greater certainty and fewer delays associated with probate administration.
People commonly establish ILITs when they own significant assets that could trigger estate taxes, when they want to preserve a family business, or when they anticipate the need for immediate cash at death to pay liabilities. An ILIT may be appropriate for parents who wish to provide structured support for minor children, for families concerned about creditor exposure, or for those who want to earmark insurance proceeds for charitable or educational purposes. The trust offers flexibility to address varied family, tax, and liquidity concerns in a controlled and documented way.
If an estate includes substantial illiquid assets, such as real estate or a closely held business, an ILIT can ensure that heirs have access to cash to cover estate taxes and debts without forcing the sale of those assets. This preserves continuity of ownership and reduces pressure to liquidate holdings at unfavorable times. The trust provides a predictable source of funds that trustees can deploy immediately to meet obligations, preserving the estate’s long-term value for beneficiaries and supporting orderly transitions of complex assets.
When beneficiaries include minors or individuals who may not be financially prepared to manage a lump-sum inheritance, an ILIT permits structured distributions that provide continued support without handing over full control. The trust can specify disbursement schedules, educational funding, and conditions for larger distributions. Such arrangements help balance immediate needs with long-term oversight and reduce the risk that a large one-time payment is squandered. Trust provisions can be tailored to the family’s values and the beneficiaries’ likely needs over time.
An ILIT can be designed to include protections that reduce the likelihood that insurance proceeds are reachable by certain creditors of beneficiaries, depending on the structure and applicable law. Establishing spendthrift provisions and defining distribution powers helps provide a layer of protection, ensuring that proceeds are used for the grantor’s intended purposes. This is often chosen by families who want to safeguard inheritances for beneficiaries who face potential creditor exposure or who have unstable financial circumstances that require additional oversight.
Law Offices of Robert P. Bergman provides estate planning services for residents of Kenwood and the greater Sonoma County area, helping clients evaluate whether an ILIT fits their estate and legacy goals. We assist with drafting trust documents, coordinating transfers or premium funding, advising on trustee selection, and ensuring administrative steps like beneficiary notices are handled correctly. Our focus is on clear communication and practical steps so clients understand the process, timelines, and ongoing responsibilities associated with maintaining an ILIT in California.
Clients work with our office because we provide personalized planning that considers family dynamics, tax considerations, and the practical realities of funding and administering an ILIT. We prioritize clear explanations of options and hands-on assistance with necessary paperwork, coordination with insurance carriers, and preparation of beneficiary notices. Our goal is to ensure the trust functions as intended and that trustees have the guidance needed to fulfill their duties while aligning with the grantor’s objectives and state law requirements.
We place emphasis on integrating an ILIT with other estate planning documents, such as wills, revocable living trusts, powers of attorney, and healthcare directives, so each piece of a client’s plan supports the others. That coordination helps avoid conflicting beneficiary designations and ensures proceeds are distributed in keeping with the overall estate plan. Practical administration advice and clear drafting reduce the likelihood of post-death disputes and help families access funds when they are most needed.
Our office provides responsive client service throughout the life of a trust, from initial creation and funding to periodic review and trustee transition. We assist clients in evaluating funding strategies, documenting transfers, and addressing changes in family circumstances or law that could affect the trust. This ongoing support helps ensure an ILIT continues to meet client goals and that trustee responsibilities are performed consistently and transparently for the benefit of named beneficiaries.
Our process begins with a confidential review of your financial situation, life insurance arrangements, and family objectives to determine whether an ILIT is appropriate. We then prepare a tailored trust document, coordinate policy transfers or premium funding strategies, and provide guidance on trustee selection and beneficiary notices. Once the trust is established, we assist with administrative tasks as needed and recommend regular reviews to adapt to changes in assets, family relationships, or law. Our approach emphasizes clarity, proper documentation, and reliable communication throughout the process.
In the initial phase we gather information about existing life insurance policies, anticipated premiums, family structure, and estate goals. This includes determining policy ownership status, beneficiary designations, and any incumbent legal or tax considerations. Based on this review, we draft a trust document that reflects funding methods, distribution rules, trustee powers, and any Crummey or gift provisions necessary to support ongoing premium payments while protecting the grantor’s objectives.
We carefully examine each life insurance policy to confirm ownership, beneficiary designations, and any contractual terms that could affect transfer or trust ownership. This review ensures the trust’s structure will achieve the desired tax and estate benefits and avoids retained incidents of ownership that could cause estate inclusion. When necessary, we coordinate ownership transfers or premium funding mechanisms, documenting each step to provide a clear administrative trail and to support the trust’s intended operation in the future.
Drafting the ILIT involves tailoring trust provisions to align with the grantor’s priorities, including distribution instructions, trustee powers, and funding methods. We include clear language addressing Crummey rights when annual gifts are used to pay premiums and specify recordkeeping and notice procedures. The funding plan outlines how premiums will be paid, whether policies will be transferred to the trust, and how any cash or assets will be managed to support the trust’s obligations and long-term goals.
Once the trust document is finalized, we assist with implementation steps such as executing transfer documents, coordinating with insurers to change ownership, and establishing accounts for premium funding if needed. We prepare and advise on beneficiary notices and any required gifts to the trust that support premium payments. Clear documentation at this stage is important to establish the trust’s intended legal position and to reduce the chance of unintended estate inclusion or administrative errors later.
Coordination with insurance carriers and financial advisors is necessary to confirm the feasibility of transferring policies, changing ownership, or arranging premium payments from the trust. We handle communications with insurers about ownership changes, beneficiary designations, and policy endorsements. Working together with financial advisors ensures the ILIT’s funding plan aligns with broader investment and cash flow strategies, reducing surprises and making administration smoother for trustees and beneficiaries.
We help establish practical administrative practices, including regular recordkeeping, procedures for sending Crummey notices to beneficiaries, and maintenance of proof of gifts used to pay premiums. These practices reduce the risk of disputes or tax complications and create a reliable framework for trustees to follow. Setting clear procedures early simplifies ongoing management and provides beneficiaries with transparency about the trust’s operations and their rights under the trust provisions.
After funding, the ILIT benefits from periodic review to reflect changes in assets, tax law, or family circumstances. We work with clients to update trust terms, confirm funding sufficiency, and address trustee transitions when necessary. Planning for successor trustee appointments and maintaining clear records simplifies administration and ensures continuity. Regular reviews help preserve the trust’s intended benefits and adapt distribution provisions to match evolving family needs and financial realities.
We recommend periodic reviews of the ILIT to confirm premium funding remains adequate, beneficiary designations are consistent with current wishes, and trust provisions continue to reflect the grantor’s goals. These check-ins identify any changes needed due to asset growth, changes in family composition, or tax law developments. Adjustments made proactively minimize the risk of administrative complications and help ensure the trust remains an effective component of the overall estate plan.
Planning for trustee succession protects continuity when the serving trustee can no longer act. We assist with naming successor trustees and documenting a clear transition plan that addresses policy management, record transfer, and beneficiary communications. Clear succession planning reduces delays and ensures beneficiaries receive timely distributions per the trust terms. Preparing trustees with plain-language guidance and documented procedures fosters consistent administration and reduces the likelihood of disputes at a sensitive time.
An Irrevocable Life Insurance Trust is a trust that owns a life insurance policy and is generally structured so that the death benefit is not counted in the grantor’s taxable estate. The trust is irrevocable, meaning the grantor gives up the power to revoke the trust and directly control the policy, which helps achieve the desired estate planning and liquidity objectives. The trust names beneficiaries and provides instructions for distributing proceeds, allowing the grantor to ensure funds are used to pay estate obligations or support heirs in a controlled manner. Establishing an ILIT typically involves drafting a trust agreement, appointing a trustee, and transferring ownership of an existing policy or arranging for premiums to be paid by the trust. The trustee administers the policy, manages premium payments, and ensures distributions follow the trust’s terms. Proper planning around ownership, timing of transfers, and funding strategies is important to obtain intended tax benefits and to ensure the trust functions as designed at the time of the grantor’s death.
Transferring a life insurance policy to an ILIT can remove the death benefit from the grantor’s taxable estate if the transfer and subsequent administration avoid retained incidents of ownership. This may reduce potential estate taxes and preserve assets for beneficiaries by providing liquidity that does not increase the taxable estate amount. However, a transfer made within three years of the grantor’s death may still be included in the estate under federal rules, so timing and careful documentation are essential to achieve the intended tax effect. The grantor should coordinate ownership transfer, beneficiary designations, and trustee duties to avoid inadvertent inclusion of policy proceeds. Consulting about gift tax implications and ensuring annual gifts intended to fund premiums qualify for gift tax exclusions is also important. When properly structured, the ILIT provides a predictable mechanism for delivering funds while minimizing estate tax exposure, but ongoing attention to funding and administration is necessary to maintain those benefits.
Crummey rights are temporary withdrawal rights granted to beneficiaries that make annual gifts to the ILIT qualify for the annual gift tax exclusion. When a grantor makes a gift to the trust to pay premiums, beneficiaries are notified that they have a limited time to withdraw a portion of the gift. If beneficiaries do not exercise the withdrawal right, the funds remain in the trust to be used for premiums or other trust purposes, and the gift retains its favorable exclusion treatment for gift tax purposes. Properly administering Crummey notices and documenting beneficiaries’ rights is an administrative requirement to support the tax treatment of gifts to the ILIT. Notices should be timely and clear, and the trustee must maintain records showing the notices were sent and that beneficiaries either waived their withdrawal rights or allowed the funds to remain in trust. Consistent procedures help preserve the intended tax benefits while allowing ongoing premium funding for the policy.
When choosing a trustee for an ILIT, consider someone who is trustworthy, capable of consistent recordkeeping, and willing to manage communications with insurers and beneficiaries. The trustee should understand the administrative duties involved, such as premium payments, sending beneficiary notices, and maintaining documentation. Some clients choose a trusted family member or friend; others prefer a professional or corporate trustee for continuity and administrative capacity. Naming successor trustees and providing clear guidance within the trust helps ensure continuity if the initial trustee cannot serve. The trustee’s role does not require daily involvement in financial decisions beyond managing the trust’s obligations and following its terms, but it does require attention to timing and documentation. Trustees should be prepared to coordinate with advisors and follow any distribution rules set by the grantor. Clear trustee powers and limitations in the trust document reduce ambiguity and support smoother administration after the grantor’s death.
Premiums for a policy held by an ILIT are commonly funded by annual gifts from the grantor to the trust. These annual gifts may qualify for the gift tax annual exclusion if beneficiaries receive proper notices of limited withdrawal rights. Another approach is to transfer an existing paid-up policy into the trust, eliminating the need for future premium payments. The funding method chosen depends on the policy type, its premium schedule, and the grantor’s financial planning objectives, and should be documented to preserve the tax position and administrative clarity. Maintaining clear records of gifts used to pay premiums and the sending of any required notices is essential for administration. If funding ceases or is inconsistent, the trustee may need to address policy lapses or consider alternatives such as paying premiums from trust assets. Regular review ensures the chosen funding strategy remains practical and aligned with the grantor’s broader financial plan and the trust’s long-term goals.
Because an ILIT is irrevocable, the trust’s terms generally cannot be changed by the grantor after execution, which is an intentional feature to achieve estate planning goals. However, under certain circumstances, modifications or decanting may be possible through court approval, trustee powers, or consent of beneficiaries depending on state law and the trust language. Changes are typically more limited compared with revocable trusts, so it is important to set terms carefully at the outset and consider potential future circumstances when drafting the trust agreement. If changes are needed due to shifting family needs, tax law changes, or asset circumstances, discussing options early with an attorney helps identify feasible solutions that preserve the trust’s objectives. Planning for successor trustees, including provisions for unforeseen events, and reviewing the trust regularly with counsel can reduce the likelihood that major amendments will be necessary.
If beneficiaries exercise their Crummey withdrawal rights, they may withdraw the specified portion of the gift during the notice period. In practice, many beneficiaries do not exercise these short-term withdrawal rights, allowing the funds to remain in the trust for premium payments. Trustees should document any withdrawals and maintain records that explain how the remaining funds were used. When beneficiaries do not withdraw funds, the gifts typically remain in trust and are available to pay premiums or be managed according to trust terms. The trust should be drafted to anticipate the possibility of occasional withdrawals and include instructions for handling such events without jeopardizing premium funding or the trust’s tax position. Clear procedures for notice, a defined withdrawal window, and good recordkeeping reduce uncertainty and help maintain the ILIT’s intended operation.
When a life insurance policy held by an ILIT pays out, proceeds are distributed according to the trust terms and do not usually pass through probate, which can enable beneficiaries to access funds more quickly. The trustee can immediately take steps to claim proceeds from the insurer, manage initial expenses, and distribute funds per the trust’s instructions. While some administrative steps are required, the trust often allows for a more rapid and controlled distribution than probate proceedings would permit, providing necessary liquidity to address taxes, debts, or immediate family needs. The timing of access depends on the insurance company’s claim procedures, the trustee’s responsiveness, and whether any conditions or claims delay payment. Keeping policy documents accessible, maintaining clear beneficiary and trustee information with the insurer, and ensuring the trustee is prepared to act streamlines the process and helps beneficiaries receive necessary funds in a timely manner.
An ILIT can provide protections against certain creditor claims against beneficiaries depending on how the trust is drafted and the applicable law. Including spendthrift provisions and structuring distributions so that beneficiaries do not receive outright lump sums can reduce the likelihood that proceeds will be seized to satisfy beneficiaries’ creditors. However, the level of protection depends on trust language and state law, and there may be exceptions for certain types of claims. Careful drafting is therefore important when creditor protection is a key objective of the trust.
Starting the ILIT process typically begins with a consultation to review your existing insurance policies, estate planning documents, and financial objectives. During this meeting we discuss funding methods, trustee selection, and distribution goals so the trust can be designed to meet your needs. We then draft a trust document, coordinate transfers or premium funding, and assist with administrative steps to implement the plan and preserve intended tax outcomes. Clear documentation and timely action on ownership transfers are important initial steps. After implementation, we recommend periodic reviews and provide guidance on trustee duties, beneficiary notices, and recordkeeping practices. These follow-up services ensure the ILIT remains effective and aligned with changes in family circumstances or assets. Taking these steps early helps establish a reliable framework so that life insurance proceeds fulfill their purpose within the overall estate plan.
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