What Is an Irrevocable Life Insurance Trust?

An irrevocable life insurance trust, often called an ILIT, is a legal structure that may be used in certain estate planning situations. In simple terms, it is a trust that can be used to hold life insurance outside of the insured person’s personal ownership, depending on how it is created and maintained.

This type of structure may be considered when a family wants more control over how policy proceeds are handled. It can also be used in planning situations where ownership and estate inclusion are important issues. Because this is a legal structure, this is not legal advice. If you are considering an ILIT, speak with a competent attorney before moving forward.

From the insurance side, the main takeaway is that ownership and beneficiary designations need to match the larger estate plan. If they do not, the policy may not work the way the family expects.

An ILIT is not for everyone, but it can be an important part of advanced planning when used properly.

Schedule a call with us if you want to discuss whether your current policy structure supports your planning goals.

Download our free ILIT Basics Guide to help you prepare for a legal conversation.