Why You May Want an ILIT (Even If You Already Have a Trust)

1. Estate Tax Protection

If your total assets — including your life insurance death benefit — could approach or exceed the federal estate tax limit, an ILIT keeps the insurance completely outside your taxable estate.
This can save your family hundreds of thousands of dollars in taxes.

(Especially important now that the estate tax exemption is expected to drop sharply in 2026.)

2. Creditor and Divorce Protection

Because the ILIT owns the policy, the proceeds are:

• Protected from your creditors

• Protected from your beneficiaries’ creditors

• Shielded from divorce claims

• Secured for your children

This level of protection is much stronger than simply naming beneficiaries on a policy.

3. Control Over How Your Life Insurance Is Used

An ILIT lets you decide exactly how the money should support your family.

You can:

• Protect minor children

• Delay distributions until certain ages

• Provide lifetime support to a spouse

• Protect a child with spending issues

• Prevent an adult child from receiving a large lump sum at once

An ILIT turns your life insurance into a long-term, controlled legacy.

4. Avoids Probate (Just Like Named Beneficiaries)

Life insurance doesn’t go through probate if beneficiaries are properly named.
An ILIT maintains that benefit while adding protection and tax advantages.

In Simple Terms…

A revocable trust protects your assets.

An ILIT protects your life insurance.

They work together to give your family:

• Smooth administration

• Tax efficiency

• Stronger asset protection

• More control

• Long-term security

Most clients think of an ILIT as a “shield” placed around their life insurance so it truly benefits their loved ones the way they intended.