What Is The Primary Purpose Of An Irrevocable Life Insurance Trust?

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    David RacichPRO
    Fountain Hills, Arizona
    The Primary Purpose of an Irrevocable Life Insurance Trust (ILIT) is to own a life insurance policy and distribute the policies proceeds to the ILIT beneficiaries and thus outside estate. The ILIT is set up and dated first. Then the policy is dated after the trust date. The grantor generally gifts the premiums or uses the unified credit to fund the ILIT without taxes on the premiums. Consult with an estate tax attorney before moving forward with any estate planning that’s considering an ILIT.
     
    Answered on June 4, 2013
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    Jeff Davis
    Insurance Advisor, Lordship Insurance Services, California
    Life Insurance Trusts allow Insurance proceeds to go into a trust and allocated where the person who controls the trust sees fit. It is a great way to ensure your wishes are carried out with the proceeds deposited. In an Irrevocable Life Insurance trusts the person who sets it up basically loses the ability to change the trust. It may be used to prevent anyone else from changing the original intention behind why the trust was first set up. It is a great tool to ensure future financial investments/distributions are adhered to. A Life Insurance professional can explain the basics of how insurance fits in and then direct you to a legal professional who can set it up.
    Answered on June 4, 2013
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    Fred Adams
    The HSA Expert, Health Revival, Athens, GA
    An Irrevocable Life Insurance Trusts is designed to ensure payments from an Insurance policy go towards a trust that has been pre-designed to determine how proceeds will be allocated upon one's passing. This tool is used to ensure your wishes are carried out, as stated at the time the trust was established. One an Irrevocable Life Insurance trust is set up, the person who established the trust loses the ability to change how proceeds are later paid preventing anyone from changing the original intention of the trust.
    Answered on September 6, 2014
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