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Irrevocable Life Insurance Trust

The irrevocable life insurance trust is another great tool to use if you are interested in taking care of your family after your death, but currently have a large taxable estate. The irrevocable life insurance trust can also be used to hold life insurance policies and/or if you have a large taxable estate (especially one that is near or over five million dollars). A life insurance trust is an irrevocable, non-modifiable trust that is both the owner and beneficiary of one or more life insurance policies.

The irrevocable life insurance trust allows an individual to remove the life insurance proceeds from their estate because they are no longer the owner of the policy. This can be done prior to setting up the life insurance policy and in some cases, life insurance policies can be assigned at later times to irrevocable life insurance trusts.

The irrevocable life insurance trust then designates a spouse and/or other heirs (children) as remainder beneficiaries, or may even name another irrevocable trust to receive the life insurance money. The trust is very flexible and can be structured freely where the beneficiaries receive the money outright, or with the limitations where the proceeds are held for the health, care and maintenance of your family members.

Some other benefits to the life insurance trust include: the reduction of an estate for tax planning purposes, providing a source of supplemental income to family members, complete control over how beneficiaries receive assets, protection of beneficiaries who are receiving governmental benefits, ability to create or fund other trusts for the support of family members and protection of the cash value of life insurance proceeds from personal creditors.

Learn more about the most common irrevocable trusts:

Learn more about the different estate planning strategies:

Contact Capital Planning Law, PLLC for your complimentary consultation to discuss your business law and corporate transactions, estate planning, probate, guardianship and/or real estate needs.