While death and taxes are two certainties in life, taking advantage of estate planning tools such as an Irrevocable Life Insurance Trust (ILIT) allows you to limit the amount of taxes your family pays upon your death. By investing in an ILIT now, you can protect your beneficiaries, and they can keep more of their inheritance without having to worry about hefty taxes or fines.
An ILIT is a trust for life insurance, so the proceeds from your policy can avoid estate tax. It is a living trust no one can dissolve or revoke unless you fail to pay your life insurance premiums during your lifetime.
With an ILIT, you will transfer ownership of your life insurance policy from you to the trust. You must name someone else to act as a trustee to handle your insurance premium payments and eventually distribute funds. If properly managed, your ILIT trustee will distribute the insurance proceeds to your beneficiaries without taxes.
For example, if you have $10 million in assets and purchase a life insurance policy with a $5 million death benefit, you would have a taxable estate of $15 million, and your heirs would have over a million dollars in federal taxes. If you placed the insurance policy in an ILIT, the taxable estate would only be $10 million, and you would reduce the amount of taxes your heirs would have to pay.
As with any estate planning tool, there are advantages and drawbacks to using an ILIT with some of the top being:
Generally, an ILIT will benefit you if you are in any of the following situations:
If you’re interested in setting up an ILIT, our estate planning attorneys at Crow Estate Planning & Probate are here to help. Our attorneys will ensure your trust protects your legacy while meeting all legal requirements. Contact us today to learn how we can aid in your life insurance and estate planning needs throughout Tennessee and Kentucky.
All the folks at Crow Estate Planning are super helpful and ready to assist in any way they can. I felt very comfortable and appreciated the knowledge and wisdom they provided in making important decisions.
Wessley was great. He answered all of our questions and took great care of 2 generations in my family. The turn around for completion was quicker than I thought. When we have needs in the future we will return to Crowe estate planning for assistance.
Very pleasant experience. Staff very friendly and professional.
Excellent Firm to do Business with.
Excellent service! Very nice, professional, and thorough. Highly recommend!
My wife and I needed to get our will in order. Kyle Shannon and his team were very professional and knowledgeable about our requirements. Our needs were met in a timely manner. We highly recommend this office.
John took time during our consultation to answer all our questions and provide us with information to help us make the best decisions. His office was responsive and flexible scheduling and rescheduling appointments for us and ensuring we had all we need to move from step to step.
Mr.Crow is a very trustworthy attorney that you can count on to gives you great advise, and direction to make the best decision for you
Very attentive. Made sure to clearly understand my needs and expectations for setting up my trust.
Mr. Shannon, there are no words to express my gratitude and appreciation for your professionalism, knowledge of law, and always having a direct and concise answer to any and all of my questions. You and your team did not fail me. You are truly a credit to your profession. Your mannerisms were beyond expectations! On a side notethe office building added a tint of charm to the time period. I was truly impressed! Thank you so much for your assistance and I wish you the best as you move forward through your law career.
Thomas Steelman 
John Crow 
Jonathon Garnett 
