Irrevocable life insurance trusts (ILIT’s) are used to:
- create an estate for heirs using life insurance
- shield life insurance payouts from estate tax
- replace assets given to charities or placed in IIOT’s (Irrevocable Income Only Trusts)
- Trust makers, who control their ILIT’s through their instructions
- Trustees and their successor trustees, named by the trust makers
- Beneficiaries and contingent beneficiaries, named by the trust makers
Who buys the life insurance on my life or my partner/spouse’s and my lives?
The life insurance is purchased by the ILIT’s trustees.
Can I or my partner/spouse be a trustee?
A third-party, independent trustee should be named in order to keep proceeds out of your taxable estate.