Generally, life insurance may be a great solution, but owning it inside your estate may exacerbate estate taxes. One option is to create an irrevocable life insurance trust (ILIT) and have the ILIT own the life insurance policy from the start. The ILIT will collect the death proceeds and distribute the proceeds to the trust beneficiaries.
The type of trust that is referred to as a life insurance trust is called an Irrevocable Life Insurance Trust (ILIT). The owner of the life insurance must be the trust, so it is important to get the ILIT set up correctly.
Not all trusts that are used for life insurance are Irrevocable Life Insurance Trusts. But that is the one most people are referring to when they talk about a life insurance trust.
.JPG){kind=avatar}
Not all trusts that are used for life insurance are Irrevocable Life Insurance Trusts. But that is the one most people are referring to when they talk about a life insurance trust.