Irrevocable Life Insurance Trust (ILIT)

An Irrevocable Life Insurance Trust (ILIT) is a trust designed to own and manage life insurance policies for estate planning purposes. Once established, the grantor cannot modify or revoke the trust. The ILIT holds the life insurance policy outside the grantor’s estate, ensuring that the death benefit is excluded from estate taxes. This tool is crucial for family offices managing wealth transfer strategies, as it helps preserve family wealth, provides liquidity to pay estate taxes, and protects beneficiaries from creditors. Proper structuring and funding of an ILIT can significantly reduce tax liabilities and ensure efficient wealth transfer across generations.