Category - Irrevocable Life Insurance Trust
An Irrevocable Life Insurance Trust, or ILIT, is an irrevocable trust that holds all of the “Incidence of Ownership” of your life insurance policy. This means that, for Estate Tax purposes, the Trust (and not you) are the owner of the life insurance policy. Since the policy does not belong to you, it will not be included in your Gross Estate upon your death, and its death benefit should pass Estate and Income Tax free to your heirs. Due to Internal Revenue Code IRC 2035 and the three-year lookback rule, make sure you establish your Irrevocable Life Insurance Trust well before you purchase your Life Insurance policy.