What Is An Irrevocable Life Insurance Trust

What Is An Irrevocable Life Insurance Trust

Historically, one of the main reasons to set up an irrevocable trust has been to avoid or minimize any potential estate tax, but now there are other planning purposes for these trusts. An advantage of life insurance trust is that it removes the life insurance from the estate of the insured. You should carefully consider who the trustee is and discuss the ramifications with your attorney.

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How Does an Irrevocable Life Insurance Trust Work?

How Does an Irrevocable Life Insurance Trust Work?

An irrevocable life insurance trust is when the trust is the owner of the insurance policy, which keeps the proceeds of the life insurance out of the taxable estate. Also, gifts can be made to fund the premiums, which will ultimately reduce the taxable estate. After your death, the trust’s assets – also known as the insurance proceeds – are available to your beneficiaries income-tax-free.

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