Today’s tip will cover “What is an irrevocable life insurance trust? Also known as an ILIT!
An ILIT is created by an individual (also known as the grantor) during his or her lifetime. The ILIT owns a life insurance policy on the grantor’s life via the transfer of ownership of an existing policy, or through the grantor’s annual contribution of cash to pay the premiums on a policy purchased by the trust.
The grantor designates beneficiaries, usually family members, who will typically receive the proceeds upon the death of the grantor.
The ILIT may be able to accomplish several estate objectives such as 1) Meeting liquidity Needs 2) Managing estate taxation on the policy proceeds and 3) Providing income to survivors.
And remember, creating an ILIT should be done with the assistance of a qualified estate planning attorney.
Catherine Magaña is a CFP® or CERTIFIED FINANCIAL PLANNER™ in Carlsbad California. If you would like to set up a time to discuss your financial goals she can be reached at 760-692-5700, info@savvyup.com or private message.
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