What are the mechanics of an ILIT?

As the name implies, the ILIT is an irrevocable trust. That is, it cannot be changed after its inception. The life insurance policy cannot be put back in your name once it has been put into the trust. A lawyer drafts the trust with your desires in mind as to how and to whom the proceeds are to be distributed and by whom (a trustee). A life insurance policy is paid for out of the trust with money deposited into the trust over time by the settler (you). The proceeds of the insurance policy can be distributed by the trustee to trust beneficiaries immediately or over time. Or, you can design a triggering event such as a college graduation or marriage to signal a distribution. You can also distribute assets based upon the trustee’s discretion. The life insurance proceeds will not be tied to probate as long as the beneficiary of the policy is not your estate.

Overall, there are a multitude of issues with regards to Wills, Trusts and Advanced Directives, and to make sure that you are doing everything you can during your lifetime to prepare for what will happen after you have passed, contact a Spring estate planning lawyer at Garg & Associates today to get this process started and to protect the future of those you love.

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