What is a life insurance trust?
A life insurance trust, or it’s also called an ILIT, is an irrevocable trust that owns your life insurance policies during your life and it’s the beneficiary of your life insurance policies at death. Essentially, it’s a trust that comes into the death benefits from your life insurance policies. The main benefits of an ILIT are that, if structured properly, the life insurance proceeds are kept out of your estate for estate tax purposes and are probably even these days more important than that is that the proceeds are creditor-protected against the creditors of the beneficiaries. There are some very important benefits for using a life insurance trust.