An irrevocable life insurance trust (ILIT) can be an effective estate planning tool for Riverdale Park residents seeking to manage life insurance proceeds outside of their taxable estate. This guide explains how an ILIT works, common reasons people consider one, and how it fits with other estate planning documents such as a revocable living trust, pour-over will, and financial powers. The Law Offices of Robert P. Bergman provides clear information about the process so individuals and families can decide whether an ILIT aligns with their long-term financial and legacy goals in California.
Understanding an ILIT involves more than the legal mechanics; it includes practical considerations like beneficiary designations, funding the trust, and trustee responsibilities after a policyholder’s death. This page outlines steps to create and maintain an ILIT, highlights how it interacts with retirement plan trusts and other documents, and describes common outcomes for families in Riverdale Park and surrounding Stanislaus County. Our aim is to provide accessible information so you can evaluate whether an irrevocable life insurance trust fits within your broader estate plan and personal circumstances.
An ILIT offers several potential benefits, such as keeping life insurance proceeds out of your taxable estate, providing liquidity for estate settlement costs, and creating controlled distributions to beneficiaries. For individuals with sizable insurance policies or complex family situations, an ILIT can provide both tax planning advantages and certainty about how proceeds will be used. It also helps preserve privacy by avoiding probate for the insurance payout and can be tailored to support retirement plan trust goals, special needs trusts, or to provide for guardianship nominations. Properly drafted and funded, an ILIT becomes a durable part of an overall estate strategy.
The Law Offices of Robert P. Bergman assists clients in Riverdale Park and throughout California with practical estate planning solutions, including irrevocable life insurance trusts. Our approach emphasizes clear communication, careful document drafting, and coordination with financial advisors and trustees to ensure an ILIT is funded and administered properly. We focus on delivering personalized plans that reflect each client’s family dynamics, tax considerations, and long-term goals. Clients receive guidance about how an ILIT interacts with other instruments such as wills, powers of attorney, and trust certifications to achieve intended outcomes.
An irrevocable life insurance trust is a legal entity that owns a life insurance policy and names beneficiaries to receive proceeds outside of the insured’s probate estate. Creating an ILIT typically requires transferring an existing policy or purchasing a new policy owned by the trust, and naming the trust as both owner and beneficiary. Because ownership is transferred out of the insured’s name, the policy proceeds are generally excluded from the insured’s estate for federal estate tax purposes if the timing and funding requirements are met. Proper administration includes gift tax planning and ensuring trustee powers align with the trust document.
Key practical matters include choosing a trustee who will manage premium payments and distributions, establishing a mechanism to fund the trust for ongoing premiums, and coordinating beneficiary designations with other estate documents. An ILIT may work alongside revocable living trusts, pour-over wills, and other instruments that govern assets at death. It is important to consider whether placing a policy in an irrevocable trust suits your liquidity needs and family goals, and to plan carefully to avoid unintended tax consequences or gaps in coverage.
An ILIT is a trust that cannot be changed by the grantor once executed and that owns a life insurance policy on the grantor’s life. The trust agreement specifies how proceeds will be distributed to named beneficiaries after the insured’s death, which can provide protection from probate and may offer estate tax advantages. Once the policy is in the trust, the grantor usually makes gifts to the trust to cover premium payments, often using annual gift exclusions or other planning techniques. Trustees are responsible for managing the policy, ensuring payments are made, and distributing proceeds according to the trust’s terms.
Establishing an ILIT involves drafting a trust instrument, transferring ownership of an existing life insurance policy or arranging for a new policy to be owned by the trust, and adopting a funding plan for premiums. The trust should name successor trustees and include clear distribution provisions for beneficiaries, including any trust substructures like special needs or pet trusts if appropriate. Additional steps include coordinating beneficiary designations, preparing a certification of trust for administrative purposes, and maintaining records of premium payments and gifts. Attention to timing is important to avoid estate inclusion under the three-year lookback rule.
Understanding common terms helps demystify ILITs and related estate planning documents. This section provides clear definitions and explanations of terms you are likely to encounter when creating or administering an irrevocable life insurance trust. Familiarity with vocabulary such as beneficiary, trustee, grantor, funding, and pour-over will enables better decision making and smoother coordination with financial advisors and trustees. The following glossary is designed for Riverdale Park residents to use when discussing ILITs and complementary estate planning instruments with legal counsel.
The grantor is the person who creates and funds the trust by transferring assets into it or arranging for the trust to own a life insurance policy. In the context of an ILIT, the grantor typically was the insured who arranged for the trust to hold and be the owner of a life insurance policy. Once the trust is irrevocable, the grantor generally cannot reclaim ownership of the policy or modify the trust’s terms. The grantor’s actions in funding and establishing the trust often require careful timing to achieve intended tax and estate planning results.
The trustee is the individual or institution responsible for managing the trust according to its terms, including paying premiums, keeping records, and distributing proceeds to beneficiaries after the insured’s death. Trustees must act in the beneficiaries’ best interests and follow the trust document closely. Choosing a trustee who is capable of handling administrative and financial duties, and who understands the responsibilities involved with an ILIT, is an important decision for grantors in Riverdale Park and throughout Stanislaus County.
A beneficiary is a person or entity designated to receive trust assets or policy proceeds under the terms of the ILIT. Beneficiary designations within the trust determine how and when proceeds are distributed, which can include outright distributions, staggered payments, or distributions held in further trust for specific purposes like education, health care, or maintenance. Beneficiary designations should be reviewed in conjunction with other estate planning documents to ensure consistency and to reflect current family circumstances and wishes.
Funding an ILIT commonly involves making gifts to the trust to cover insurance premium payments; these gifts can use annual gift tax exclusions or other planning strategies to minimize tax impact. Proper documentation of gifts and trustee actions is essential to demonstrate that premiums were paid by the trust and that the policy is not includable in the grantor’s estate. Ongoing coordination between the grantor, trustee, and financial advisors ensures the trust remains properly funded and that the policy continues to provide the intended financial protection for beneficiaries.
When weighing an ILIT against alternatives, consider goals like probate avoidance, estate tax reduction, and beneficiary control. A revocable living trust offers flexibility and asset management during incapacity, while an ILIT specifically addresses ownership and disposition of life insurance proceeds. For some clients, a combination of instruments — such as a revocable trust paired with an ILIT and a pour-over will — achieves both control during life and efficient transfer at death. Evaluating these options requires considering timing, tax implications, and how each document interacts with retirement plan trusts or special needs provisions.
If your life insurance policy is modest relative to your overall estate and you do not expect to face federal estate tax liability, owning a policy outright and coordinating beneficiary designations may provide a simple, effective solution. In those circumstances, a full ILIT could add complexity without significant tax or probate benefits. However, even with smaller policies, it is important to ensure beneficiaries are properly designated and to consider how policy proceeds will interact with other planning documents such as pour-over wills and powers of attorney.
When beneficiaries are adults who require immediate access to funds and there are no concerns about creditor claims, special needs, or spendthrift protection, direct beneficiary designations may suffice. In such cases, the administrative burden of setting up and funding an ILIT might not be warranted. Nevertheless, it remains wise to coordinate beneficiary designations with your broader estate plan to avoid conflicts with revocable trusts, retirement plan trusts, or guardianship nominations and to ensure proceeds are used as intended.
When life insurance amounts are large relative to your overall estate or you have assets that may trigger estate taxes, an ILIT can play an important role in preserving wealth for beneficiaries and providing liquidity to pay estate settlement costs. Coordinating an ILIT with retirement plan trusts, irrevocable life insurance trust provisions, and other estate documents helps achieve cohesive planning. This broader approach usually involves careful drafting, funding strategies, and coordination with financial professionals to align the ILIT with long-term legacy objectives for your family.
Families with blended relationships, beneficiaries with special needs, or concerns about creditor exposure often benefit from the protective features of trust-based solutions. An ILIT can be structured to limit direct distributions, hold proceeds in further trust, or coordinate with a special needs trust to preserve public benefits while providing supplemental support. Engaging in comprehensive planning allows for the design of provisions that reflect unique family dynamics, guardianship nominations where appropriate, and mechanisms to adapt over time within the constraints of an irrevocable instrument.
A comprehensive approach that incorporates an ILIT alongside revocable living trusts, pour-over wills, and other estate planning documents can deliver coordinated outcomes such as reduced probate involvement, clearer asset pathways, and targeted protection for beneficiaries. This coordination helps ensure that life insurance proceeds are available when needed, that distributions follow the grantor’s intentions, and that tax and administrative surprises are minimized. Thoughtful planning also addresses funding mechanisms and trustee selection to maintain continuity and responsiveness to changing circumstances.
Additionally, comprehensive planning allows grantors to tailor provisions for unique goals such as providing for minor children, supporting a family member with disabilities through a special needs trust, or creating a pet trust for animal care. When an ILIT complements other documents like a retirement plan trust or pour-over will, families in Riverdale Park can achieve a holistic plan that respects privacy, reduces delays in distributions, and provides a clear framework for trustees and loved ones to follow after a policy owner’s death.
One key advantage of placing a life insurance policy in an irrevocable trust is the potential to exclude proceeds from the grantor’s taxable estate, which can preserve more of the policy value for beneficiaries and provide liquidity to settle estate obligations. This benefit depends on careful timing and compliance with tax rules, including gift tax planning and avoiding the three-year inclusion period. When coordinated with other estate planning measures, the ILIT can be an effective tool to maintain cash available to pay debts, taxes, and administrative costs without forcing sale of other estate assets.
An ILIT gives the grantor the ability to structure how life insurance proceeds are held and distributed, allowing for staged distributions, trust preservation for minors, or protection from creditors and divorce proceedings. These control measures can be especially valuable for families wishing to ensure ongoing support for beneficiaries while limiting lump-sum access that could be detrimental. Properly drafted distribution rules and trustee powers can reflect the grantor’s intentions while safeguarding assets for future generations and protecting vulnerable beneficiaries.
Begin planning how the trust will be funded well before transferring ownership of a policy. Funding typically requires gifts to the trust to cover premiums; arranging consistent funding prevents lapses in coverage and helps demonstrate that the trust is truly the owner of the policy. Consider how annual gift exclusions or other tax allowances can be used to fund the trust, and coordinate with financial accounts to create a reliable source of premium payments so the trustee can fulfill obligations without interruption.
Ensure the ILIT is coordinated with your revocable living trust, pour-over will, beneficiary designations on retirement plans, and any special needs or pet trusts. Inconsistent or outdated beneficiary designations can undermine planning goals or cause confusion at the time of a claim. Review and update all related documents periodically, especially after major life events like marriage, divorce, the birth of a child, or changes in financial circumstances to ensure the ILIT continues to reflect current intentions.
Consider an ILIT if you want to remove life insurance proceeds from your taxable estate, provide assured liquidity to pay estate settlement expenses, or control how insurance proceeds are distributed to beneficiaries. It can be particularly useful for individuals with large life insurance policies who anticipate estate tax exposure, or for those who want to create structured distributions for heirs. An ILIT may also be appropriate for those who wish to protect proceeds from creditor claims or to coordinate benefits for a beneficiary receiving means-tested government assistance.
Families with blended relationships, beneficiaries who lack financial management skills, or those who want to provide long-term support for minors or adult children with special needs often find ILITs advantageous. An ILIT can be paired with trust provisions that create sub-trusts, designate guardianship nominations, or provide for pet care instructions. Thoughtful planning and regular reviews ensure that the trust remains effective and aligned with broader estate planning goals, taking into account changing laws, family dynamics, and financial circumstances over time.
Common reasons to explore an ILIT include having a life insurance policy of significant value relative to your estate, needing funds to pay estate taxes or debts, wanting to protect proceeds from creditors or divorce proceedings, or seeking to provide structured support to beneficiaries. Additionally, if a beneficiary receives public benefits, an ILIT in combination with a special needs trust can preserve those benefits while providing supplemental funds. The ILIT’s role in your plan depends on your personal circumstances, financial profile, and long-term goals.
When life insurance proceeds are substantial compared to other estate assets, including those proceeds in your estate could create an estate tax burden or force liquidation of other property. An ILIT can remove the policy from the taxable estate if properly established and funded, providing beneficiaries with liquidity while preserving other assets. Planning must be careful with regard to timing rules and gift treatment of premium payments to ensure the intended tax outcome is achieved and documented correctly for future administration.
If you are concerned that beneficiaries might receive a large lump sum that could be mismanaged, an ILIT can establish distribution controls, trusteeships, or staggered payouts to promote long-term financial stability. These provisions can be tailored to address education needs, housing, medical expenses, or other specific goals, while also providing a framework to prevent premature depletion of assets. This arrangement is useful for families wishing to provide for minors, young adults, or beneficiaries who have limited financial experience or creditor exposure.
When a beneficiary relies on means-tested public benefits, an outright inheritance could jeopardize eligibility. An ILIT used in conjunction with a properly drafted special needs trust can provide additional support without disqualifying the beneficiary from essential programs. Drafting coordination and trustee instructions must be precise to preserve benefits while supplying supplemental resources for quality of life, medical care, and housing. Careful coordination between the ILIT terms and any special needs provisions is essential to achieve both protection and support.
Residents of Riverdale Park can consult with the Law Offices of Robert P. Bergman for guidance on creating and administering irrevocable life insurance trusts. We assist with drafting trust documents, coordinating trust ownership of policies, advising on funding strategies, and preparing certifications of trust or trust modification petitions when needed. Our process includes reviewing beneficiary designations, aligning the ILIT with other estate planning instruments, and providing practical steps for trustees to follow so the trust functions effectively at the time of a claim or distribution.
The Law Offices of Robert P. Bergman provides focused guidance on estate planning matters tailored to California laws and local needs in Stanislaus County. We assist with identifying whether an ILIT fits into your estate plan, drafting documents that reflect your intentions, and coordinating with trustees and financial advisors to ensure proper funding. Our practice emphasizes clear communication about timing, tax implications, and trustee responsibilities to help clients avoid common pitfalls and maintain continuity within an overall estate plan.
We work with clients to integrate ILITs with related estate planning documents, including revocable living trusts, pour-over wills, powers of attorney, and retirement plan trusts. This coordination reduces the risk of conflicting designations and helps maintain consistency across plans. From preparing certification of trust documents to assisting with trust modification petitions when circumstances change, our firm provides practical legal drafting and administrative recommendations tailored to each family’s goals in Riverdale Park and neighboring communities.
Clients receive guidance on trustee duties, funding options, and documentation practices to ensure premiums are paid and records are maintained. We also advise on how an ILIT fits within broader strategies such as protecting beneficiary benefit eligibility or providing structured distributions. Our goal is to deliver solutions that match clients’ needs while ensuring that all required steps are taken so the trust operates as intended when the policy proceeds become payable.
Our firm follows a structured process to create an ILIT that aligns with your objectives. We begin with an in-depth review of your current policies and estate documents, discuss goals for beneficiaries, and recommend whether transferring an existing policy or purchasing a new policy owned by the trust is appropriate. We then draft trust documents, assist with policy transfers, prepare any necessary trust certifications, and advise on gift funding strategies. Throughout, we coordinate with trustees and financial advisors to ensure a smooth transition and ongoing administration.
The first step is a comprehensive review of your existing estate plan, life insurance policies, retirement accounts, and beneficiary designations. During this stage we discuss family circumstances, tax considerations, and desired distribution mechanisms for policy proceeds. This review identifies whether an ILIT fits your plan and whether complementary measures such as a pour-over will, retirement plan trust, or special needs trust are needed. Clear documentation of current ownership and beneficiary designations is essential to determine next steps for transferring or establishing a trust-owned policy.
We examine whether existing life insurance policies are currently owned by you or another entity, and whether beneficiary designations are aligned with your estate planning goals. If a policy is to be transferred into the ILIT, we evaluate any implications such as possible gift tax consequences or the three-year inclusion rule. We also ensure beneficiary designations on retirement plans and other accounts do not conflict with the trust’s intended operation, and recommend steps to harmonize all documents to minimize surprises at claim time.
We explore practical approaches for funding the trust to cover premium payments, including using annual gift tax exclusions, structured contributions, or other available strategies suited to your financial situation. Clear funding plans and proper documentation of gifts to the trust help support the trust’s ownership of the policy. We discuss the timing of gifts and the need for trustee procedures to collect funds and make premium payments, ensuring the policy remains in force and that the trust’s ownership is respected for estate planning purposes.
Once planning decisions are made, we prepare the ILIT document tailored to your goals and California law. The drafting stage addresses distribution instructions, trustee powers, successor appointment provisions, and any special provisions for beneficiaries or sub-trusts. We prepare related documents such as a certification of trust for administrative use and coordinate with the insurance carrier to transfer policy ownership or to issue a new policy in the trust’s name. Attention to precise language during drafting ensures clarity in administration and future trust actions.
Drafting focuses on how proceeds should be distributed, conditions for distributions, and the scope of trustee authority. Clauses may address outright distributions, staggered payments, or distributions held in further trust for vulnerable beneficiaries. Trustee powers should be clearly defined to allow premium payments, investment of trust funds, tax filings if required, and hiring of advisors. Proper drafting reduces the likelihood of disputes and provides a roadmap for trustees to carry out the grantor’s intentions effectively.
We assist with executing the trust document, obtaining a tax identification number if necessary, and coordinating with the insurance company to change ownership and beneficiary designations to the trust. This stage includes verifying the carrier’s requirements for ownership transfer, obtaining any necessary consent, and documenting the transaction to support estate planning goals. Proper coordination with the carrier avoids administrative delays and ensures the policy is owned and administered as intended under the trust’s terms.
After formation, the trust must be properly funded and administered to remain effective. This includes making regular gifts to the trust for premium payments, keeping detailed records of contributions and payments, and ensuring trustees follow the trust document. Periodic reviews are recommended to adapt to changes in family circumstances, tax laws, or financial needs. If changes become necessary, certain modifications or trust modification petitions may be available to address administrative issues while preserving the trust’s overall purpose.
Trustees should keep thorough records of gifts received, premium payments, communications with the insurance carrier, and any distributions made to beneficiaries. Clear recordkeeping supports compliance with tax and trust administration requirements and provides transparency for beneficiaries. Regular communication among trustees, beneficiaries, and advisors helps anticipate needs and coordinate further planning steps, such as integrating changes in retirement plan trusts, updating pour-over wills, or addressing potential trust modification petitions if circumstances warrant adjustments.
Periodic review of the ILIT and related estate planning documents ensures they remain aligned with your objectives, family changes, and applicable law. While an irrevocable trust limits the ability to alter core provisions, some administrative amendments or trust modification petitions can address unforeseen issues. Reviews also confirm the trust continues to be funded properly and that the trustee understands duties. Regular assessments allow for proactive management of the trust in connection with retirement plan trusts, special needs arrangements, or other complementary planning tools.
An irrevocable life insurance trust is a trust that owns a life insurance policy and names beneficiaries to receive proceeds outside of the insured’s probate estate. The trust is irrevocable, meaning its terms cannot be altered by the grantor once established, and when properly funded and timed, the proceeds are generally excluded from the grantor’s taxable estate. People consider an ILIT for reasons such as estate tax planning, providing liquidity to settle estate expenses, and creating controlled distributions to beneficiaries who may need structured support or protection from creditors. Deciding whether an ILIT is appropriate involves assessing policy size, family circumstances, and coordination with other estate planning instruments. The trust must be properly funded to cover premiums and administered by a trustee who understands their duties. Because the trust is irrevocable, it requires careful consideration and planning to ensure it meets your goals, which commonly include preserving wealth for heirs and reducing administrative burdens at the time of a claim.
Funding an ILIT typically involves making gifts to the trust to cover insurance premium payments. Grantors often use annual gift tax exclusions to transfer money to the trust, which the trustee then uses to pay premiums. It is important to document gifts and payments carefully to show the trust paid the premiums and to avoid potential estate inclusion under applicable timing rules. Coordination with financial advisors may identify the best sources for funding and the most tax-efficient mechanisms for periodic contributions. Consistent funding plans and trustee procedures help maintain the policy in force. If premiums are not reliably funded, there is a risk the policy could lapse. Proper documentation of gift transfers and timely actions by the trustee reduce administrative risks and help ensure that the ILIT functions as intended, providing the planned benefits to beneficiaries at the time of the insured’s death.
Trustees of an ILIT manage the trust according to its terms, which commonly includes collecting funds for premium payments, making timely premium payments to the carrier, keeping detailed records, and handling distributions when proceeds become payable. Trustees must follow the trust instrument and any legal requirements for fiduciary conduct, ensuring clarity and transparency with beneficiaries about administration. The trustee’s duties also include maintaining communications with the insurance company and preserving documentation that supports the trust’s ownership of the policy. Choosing a trustee who understands administrative responsibilities and who is willing to manage ongoing tasks is important. Successor trustees should be named in the trust to provide continuity, and trustees should have access to professional advice as needed. Clear trustee instructions in the trust document minimize disputes and provide a roadmap for handling claims, distributions, and any interactions required with other estate planning documents.
An ILIT can be structured so that proceeds do not disqualify a beneficiary from means-tested public benefits, but this typically requires combining the ILIT with a separate special needs trust or designing distribution provisions that preserve eligibility. Outright distributions of significant sums to a beneficiary receiving public benefits can jeopardize those benefits, so planning must be precise to provide supplemental support without violating program rules. Legal drafting and trustee guidelines are essential to maintain the beneficiary’s eligibility while offering additional financial resources. When public benefits are a concern, it is important to coordinate the ILIT with a special needs trust and obtain guidance on the interplay between trust distributions and benefit rules. Trustees should be well-informed about the limitations on distributions that could affect benefits and should work with advisors familiar with public benefits to ensure distributions are structured to enhance the beneficiary’s quality of life without unintended consequences.
Transferring an existing life insurance policy into an ILIT can have tax implications that depend on timing and how the transfer is documented. One key rule to consider is that policies transferred within a three-year period before death may still be included in the grantor’s estate for tax purposes under federal law. Planning should address the timing of any transfer and whether purchasing a new policy owned by the trust may be a preferable option. Gift tax considerations may also arise when funding the trust to pay premiums. Proper steps to minimize unintended tax consequences include documenting gift transfers, considering annual exclusion gifts to the trust, and consulting with financial and tax advisors during the planning phase. Clear policies for funding premiums and maintaining records support the trust’s intended tax treatment, and careful timing avoids exposure to estate inclusion rules that could undermine the trust’s benefits.
An ILIT typically operates alongside other estate planning documents such as a revocable living trust or a pour-over will. The ILIT specifically addresses ownership and disposition of life insurance proceeds, while a revocable living trust governs assets retained by the grantor during life and at death. Coordination ensures beneficiary designations and trust provisions work together rather than conflict. For example, a pour-over will can help ensure any assets not otherwise titled into a trust are transferred into the grantor’s revocable trust at death, but it does not substitute for the ILIT’s ownership of insurance proceeds. Reviewing and updating all documents together prevents discrepancies that could frustrate planning goals. Ensuring beneficiary designations on retirement accounts and insurance policies align with trust terms reduces the risk of unintended outcomes and helps create a seamless estate plan that addresses liquidity, distribution timing, and protection for heirs in a coordinated manner.
If a trustee fails to make premium payments, the insurance policy could lapse, which would defeat the ILIT’s purpose and potentially leave beneficiaries without the intended proceeds. To avoid this outcome, trusts should include clear funding provisions and trustee instructions for collecting gifts from the grantor and making prompt premium payments. Trustees should maintain accurate records and establish procedures to address missed contributions quickly to protect the policy from lapsing and to preserve the trust’s benefits for beneficiaries. If a lapse occurs, options may be limited depending on the policy’s terms and carrier practices, but there may be avenues for reinstatement or alternative funding strategies. Regular oversight, good communication between the trustee and the grantor, and contingency plans for premium payments reduce the risk of a lapse and provide safeguards for the continued effectiveness of the ILIT.
Yes, an ILIT can provide for pets or minor children through carefully drafted distribution provisions or by creating sub-trusts for specific purposes. For pets, a pet trust can be funded to provide for ongoing care with instructions for caretakers and designated funds for maintenance. For minor children, the ILIT can direct proceeds into trusts that manage distributions for education, health care, and general support until children reach ages specified by the grantor. These provisions create continuity of care and financial support according to the grantor’s wishes. Drafting must be precise to ensure funds are used as intended, and trustees should be given clear authority and guidance for selecting caregivers or making distributions. Coordination with guardianship nominations and other estate documents helps ensure a cohesive plan for minors and pets, providing peace of mind that dependents will receive appropriate care and financial support after the grantor’s death.
The three-year rule can cause policies transferred into a trust within three years of the insured’s death to be included in the insured’s estate for tax purposes. This rule means that timing matters when transferring policy ownership to an ILIT. To avoid estate inclusion under this rule, grantors often transfer policies well before the three-year window or have the trust purchase a new policy owned by the ILIT. Proper timing and documentation are key to achieving the intended tax treatment of life insurance proceeds. Because of the potential implications, careful planning is necessary if you intend to transfer an existing policy. Your plan should consider whether a new trust-owned policy is preferable, and it should account for gift tax considerations and funding strategies. Legal counsel and financial advisors can help select the most appropriate approach given your timeline and estate planning objectives.
Review your ILIT and related estate planning documents periodically and after major life events such as marriage, divorce, birth of children, or significant changes in financial circumstances. While the trust itself is irrevocable and limits changes to core provisions, periodic reviews confirm the trust remains properly funded, trustee appointments are current, and related documents like revocable trusts or beneficiary designations are consistent with your objectives. Regular assessments also enable proactive adjustments to administrative practices that support the trust’s ongoing operation. Because tax laws and personal situations evolve, scheduling a review every few years or after notable life changes helps preserve the ILIT’s effectiveness. Consult legal counsel and financial advisors during these reviews to ensure funding strategies remain appropriate and that any coordination needed with retirement plan trusts, pour-over wills, or special needs arrangements is maintained.
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