Irrevocable Life Insurance Trust
If the total value of your estate assets exceeds the exemption amount, the proceeds of your insurance policies will be subject to estate taxes. An irrevocable life insurance trust (ILIT) is an irrevocable trust designed to hold life insurance so the value of the policy is not included in the value of your estate, so the proceeds of a policy avoid estate tax. By removing the insurance policy’s death benefit from the owner’s taxable estate, an ILIT allows the full amount of the death benefit to go to beneficiaries—without being subject to probate or estate taxes.