The AE Team
Irrevocable Life Insurance Trust
- What is an Irrevocable Life Insurance Trust?
- Why use life insurance to pay estate taxes?
- How is life insurance “structured” to avoid taxes?
- Do you have to use an Irrevocable Trust to own life insurance?
- Why use an Irrevocable Trust?
- How does an Irrevocable Life Insurance Trust work?
- Are there any limits to the gifts made each year?
- What does the Trustee do with the gifts received?
- What happens when the Grantor (Insured) dies?
- What if Congress changes the exemption amounts?
An Overview of Irrevocable Life Insurance Trust (ILIT)
An Irrevocable Life Insurance Trust (ILIT) can be used to good advantage whenever an individual (or a couple) faces a death tax (aka Inheritance or Estate Tax) in his or her generation, and wishes to provide liquidity for payment of those taxes with existing life insurance, or insurance to be purchased, without subjecting the proceeds themselves to depletion by death taxes.