What is an Irrevocable Life Insurance Trust or ILIT?
An Irrevocable Life Insurance Trust is a separate Irrevocable Trust established to hold life insurance in such fashion that it will not be subject to estate taxation on the death of the insured. When an individual faces a taxable estate, transferring any substantial policies into such a trust can save a great deal of estate taxes. Additionally, if an individual’s estate is comprised of non-liquid assets, establishing such a trust and purchasing life insurance provides a means of paying the estate taxes without forcing sale of the illiquid assets.
