Irrevocable Life Insurance Trust

One way to avoid the taxing of life insurance proceeds at death is to establish an Irrevocable Life Insurance Trust, or “ILIT.”

An ILIT is a type of irrevocable trust that is specifically designed to hold and own life insurance policies. Once the ILIT has been set up, you will transfer ownership of your life insurance policies to the Trustee of the ILIT. Once the life insurance policy is placed in the trust, the insured person no longer owns the policy, which will be managed by the trustee on behalf of the policy beneficiaries when the insured person dies.

Once you've transferred ownership of the life insurance to the Trustee of the ILIT, you will have given up all of your incidents of ownership over the policies. Since you'll no longer own the policies, the proceeds can't be taxed in your estate when you die.

The Law Offices of Dawson G. Crawford can assist you with an ILIT throughout all of California, including Santa Clara County, San Mateo County, San Francisco County, Contra Costa County, Marin County, and Santa Cruz County.