What is an Irrevocable Life Insurance Trust?
Anyone who is beginning to think about estate planning may be considering the benefit of one or more types of trusts. Trusts are legal tools that allow the person making the trust (the “grantor”) to place assets that will be managed by a trustee and can ultimately be passed onto another party (the “beneficiary”). Trusts also involve a fiduciary relationship since the trustee has a responsibility when it comes to managing the assets held in the trust. Trusts can be established for different purposes in Georgia, and in general, trusts are divided into those that are revocable (can be amended or canceled by the grantor) and those that are irrevocable (cannot be amended or canceled by the grantor once the trust is established). One of the primary benefits of a trust is that they allow property to be passed without going through probate, but there are also other benefits.
One type of trust that you might want to consider in your estate plan is an irrevocable life insurance trust (ILIT). What is this type of trust, and who does it benefit? Our Norcross estate planning lawyers can tell you more.
Learning More About Irrevocable Life Insurance Trusts
An irrevocable life insurance trust is a specific type of trust for life insurance policies that you own. In effect, this is a type of trust in which you would place your life insurance policy. After the trust has been established, you can continue to make gifts to the ILIT for the premium payments on your life insurance policy. After you die, the insurance policy proceeds can be paid out to your beneficiaries.
As an irrevocable trust, you will not be able to amend or cancel the trust once it has been created.
Reasons to Consider an Irrevocable Life Insurance Trust
When it comes to estate planning and ILITs, these types of trusts are usually most beneficial for Georgia residents with a certain amount of wealth that they want to protect. Indeed, ILITs are a form of asset protection. Since the assets held in an ILIT will not be considered part of your taxable estate, you may be able to avoid having your estate subject to the federal estate tax if the total value of your estate is near the threshold.
At the same time, they can allow you to determine how the proceeds from your life insurance policy will be paid out to beneficiaries, which can be extremely useful for beneficiaries who may not be able to manage their money well. And like other trusts, your beneficiaries will receive the proceeds without having to go through probate.
Contact a Gwinnett County Estate Planning Lawyer for Assistance
Do you have questions about creating an irrevocable life insurance trust or another type of trust as part of your estate plan? This is something that an experienced Gwinnett County estate planning attorney at Bowman Law Firm can assist you with today. We can answer any questions you have about trusts or other components of estate planning, and we can start working with you on the elements of your estate plan as soon as you are ready. Contact us for more information.
Source:
law.justia.com/codes/georgia/title-53/
