An irrevocable life insurance trust ilit is a special trust which serves as both the owner and beneficiary of one or more life insurance policieswhen it comes down to it an ilit is primarily a financial planning and estate planning tool that is used for to protect assets specifically a large life insurance death benefit from being subject to estate taxes. You normally cannot undo an irrevocable trust after youve set it up but because ongoing premiums must be paid to keep the life insurance policy in effect all youd have to do to cancel the trust is stop making payments for the premiums the trust would then become an empty vessel when the policy lapses. A life insurance trust is an irrevocable estate planning tool that allows a person to place the proceeds of his life insurance policy out of his estate by transferring ownership of the policy to . Irrevocable life insurance trusts or the trustee of the trust should purchase the insurance on behalf of the trust rather than assigning an existing policy if an existing policy is assigned to an irrevocable life insurance trust the irs will require that the proceeds are still part of your estate if you die within 3 years of the transfer. As you can see an irrevocable life insurance trust is a multi pronged and complex system of estate management defining the benefits of an ilit the benefits of an irrevocable life insurance trust cannot be overstated there are several important reasons why one would look into an ilit when taking out a life insurance policy
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