Irrevocable Life Insurance Trusts

What is an Irrevocable Life Insurance Trust (ILIT)?

An Irrevocable Life Insurance Trust (ILIT) is a legal trust that is created to hold ownership of a life insurance policy. By placing the life insurance policy within the trust, the proceeds of the policy are not considered part of the insured’s estate, thereby potentially reducing estate taxes.

Key Benefits of an ILIT:

• Minimising estate taxes
• Protecting life insurance proceeds from creditors
• Ensuring efficient distribution of assets to beneficiaries

Setting Up an ILIT:

To establish an ILIT, you will need to work with an experienced estate planning attorney who can assist you in creating the trust document, transferring ownership of the life insurance policy to the trust, and ensuring compliance with relevant laws and regulations.

Why Choose Wright Street Lawyers for Your ILIT Needs?

Wright Street Lawyers is a trusted law firm in Adelaide, South Australia, specialising in estate planning and trusts. Our experienced team can help you navigate the complexities of setting up an Irrevocable Life Insurance Trust to protect your assets and provide for your loved ones.

Frequently Asked Questions (FAQs)

1. Can I make changes to an Irrevocable Life Insurance Trust once it is established?

While the term “irrevocable” implies that the trust cannot be changed, there are certain provisions that may allow for modifications under specific circumstances. It is essential to consult with a knowledgeable attorney to understand your options.

2. What happens to the life insurance policy if I pass away?

If you have placed your life insurance policy in an ILIT and you pass away, the trust will receive the proceeds of the policy. The trustee will then distribute the funds according to the terms of the trust document.

3. Are there any tax implications associated with an ILIT?

While an ILIT can offer tax benefits, it is crucial to understand the potential tax implications, including gift tax considerations and the impact on the overall estate tax planning strategy. Our legal team can provide guidance on navigating these complexities.