An Irrevocable Life Insurance Trust (ILIT) is often used to keep life insurance out of your taxable estate. Generally, money is gifted to the trust. The trust then applies for life insurance on the insured, or insured's in the case of Second to Die life insurance. The trust is the owner and beneficiary of the life insurance policy. Usually the children/grandchildren are beneficiaries of the trust. There are technical details that must be written correctly to make sure that the insurance proceeds are not part of the taxable estate. A qualified attorney should be consulted to draft the ILIT and to make sure that the technical details are handled correctly. Recent court cases have shown the ILIT is not the only way to keep life insurance out of the estate.

Additional Information on Estate Planning:

Estate Planning Overview
Irrevocable Life Insurance Trusts (ILITS)
Using Ownership and Beneficiary Designations
How to Get Existing Policies Out of my Estate
Can the Three-Year Rule be Avoided?
Second to Die Life (Survivorship) Insurance
Gifts - Overview
Leveraging Your Gifting Program
Grandchildren
Generation Skipping
Living Trusts
Credit Bypass Trust
Charitable Remainder Trusts
Avoid Capital Gains Income for life

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