The Jacobs Company
Keeping Life Insurance
Out of Your Taxable Estate
An Irrevocable Life Insurance Trust (ILIT) is often used to keep life insurance out of your taxable estate. Generally, money is gifted to the trust. The trust then applies for life insurance on the insured, or insureds in the case of Second to Die life insurance. The trust is the owner and beneficiary of the life insurance policy. Usually the children/grandchildren are beneficiaries of the trust. There are technical details that must be written correctly to make sure that the insurance proceeds are not part of the taxable estate. A qualified attorney should be consulted to draft the ILIT and to make sure that the technical details are handled correctly. Recent court cases have shown the ILIT is not the only way to keep life insurance out of the estate.
This document was last modified on July 27, 1999 by LMLeber
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