Irrevocable Life Insurance Trusts, or ILITs, are a type of trust that is used to hold life insurance policies. The main purpose of an ILIT is to remove the value of the life insurance policy from your taxable estate upon death. This can be especially helpful if you have a large estate and would like to avoid hefty estate taxes.
One key feature of an ILIT is that once it’s created, it cannot be changed or revoked by the grantor (the person who sets up the trust). This means that you must carefully consider all aspects before setting up an ILIT and work with a qualified attorney to ensure everything is in order.
Another important factor when considering an ILIT is choosing a trustee. The trustee will manage the trust and distribute funds according to your wishes after you pass away. It’s essential to choose someone trustworthy and capable for this role.
Setting up an Irrevocable Life Insurance Trust can be complex, but it can offer significant benefits for those with sizable estates looking to protect their assets. Be sure to consult with experts in estate planning and consider all options before making any decisions.