Frequently Asked Questions

An Irrevocable Life Insurance Trust (ILIT) is a specialized trust that owns a life insurance policy on the insured.

Families use ILITs to keep the death benefit outside the taxable estate, protect

privacy, and provide structure for how proceeds are distributed.

The ILIT—not the insured—owns the policy, which is why the trust must be administered properly.

Common reasons include:

• Reducing or eliminating estate taxes

• Avoiding probate

• Keeping insurance proceeds private

• Protecting assets from potential creditors

• Ensuring long-term financial support for beneficiaries

• Providing liquidity to pay estate expenses

ILITs are especially common in high-net-worth planning.

Because the trust—not the insured—owns the policy, someone must:

• Receive contributions

• Send Crummey Notices (when required)

• Pay premiums

• Maintain accounting and trust records

• Interact with the insurance carrier

• Administer proceeds after the insured’s death

These duties must be done consistently and accurately to preserve tax benefits and protect the family’s planning.

While a family member may be well-intentioned, ILIT administration is technical.

A professional trustee helps avoid risks such as:

• Missed or improperly documented Crummey Notices

• Late premium payments

• Poor recordkeeping

• Conflicts among beneficiaries

• Mistakes after the insured’s death

A dedicated trustee ensures the ILIT is administered correctly, year after year.