Wealth preserver – Use an ILIT to shield life insurance proceeds from estate tax
Abstract: Life insurance can provide peace of mind, but it’s important to not own the policy at death. Why? The policy’s proceeds will be included in the taxable estate and may be subject to estate taxes. To avoid this result, a common estate planning strategy is to set up an irrevocable life insurance trust (ILIT) to hold the policy. This article describes the tax benefits of an ILIT, along with some drawbacks.