Life Insurance Basics
What is a life insurance trust?
A life insurance trust (also called an Irrevocable Life Insurance Trust or ILIT) is a trust that owns a life insurance policy. The death benefit is paid to the trust rather than directly to the beneficiaries. An ILIT removes the life insurance proceeds from your taxable estate, potentially saving estate taxes.
Key Points
- ILIT: irrevocable trust that owns a life insurance policy
- Death benefit paid to trust, not directly to beneficiaries
- Removes life insurance proceeds from taxable estate
- Potential estate tax savings for large estates
- An estate planning attorney can help you establish an ILIT