What is Irrevocable life insurance trust (ILIT)?
In short
An irrevocable life insurance trust (ILIT) owns a life insurance policy on the grantor's life so the death benefit is kept out of the grantor's taxable estate.
Key takeaways
- The grantor must keep no incidents of ownership, such as the right to change beneficiaries.
- An existing policy transferred to the trust within three years of death is pulled back into the estate.
- Premium gifts usually qualify for the annual exclusion through Crummey withdrawal powers.
Where it's tested
TCP: Estate & Gift Tax Planning — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
Portability of the deceased spousal unused exclusion amount (DSUE) allows a surviving spouse to: