Irrevocable Life Insurance Trust (ILIT)
Irrevocable trust designed to own life insurance policies, removing the death benefit from your taxable estate for federal estate tax purposes.
Instructions
This trust cannot be amended or revoked after creation. Name an independent trustee (not the insured). The trust purchases and owns the life insurance policy. Make annual gifts to the trust to cover premiums, using Crummey letters to qualify for the annual gift tax exclusion. The three-year lookback rule applies to transferred policies. Consult an estate planning attorney due to the complexity.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.