Wealth Preservation LLC

Irrevocable Life Insurance Trust

An irrevocable life insurance trust (an "ILIT") is an irrevocable trust created for the principal purpose of owning a life insurance policy. As with any other trust, the insurance trust is a contract between a grantor and a trustee to administer certain property, in this case an insurance contract for the benefit of named beneficiaries.

One of the primary reasons for executing a life insurance trust is for estate tax considerations. If an ILIT is properly structured, the death benefits paid to the trust will be free from inclusion in the gross estate of the insured. In addition, the ILIT can also be structured so that the trust will provide benefits to the insured's surviving spouse without inclusion in the surviving spouse's gross estate, either.

A life insurance policy owned by an irrevocable life insurance trust can be a very effective planning strategy for spousal financial protection and estate liquidity.