The Basics of an Irrevocable Life Insurance Trust
An Irrevocable Life Insurance Trust (ILIT) is a trust that owns and is the beneficiary of one or more life insurance policies. It is often used to control how a large sum of money is left to beneficiaries, or as an asset protection vehicle against creditors. When the grantor dies, the proceeds from the insurance policy flow into the trust and are eventually distributed to its beneficiaries. Depending on the structure of the trust, the beneficiaries may be able to receive the money soon after the grantor’s death or the assets could be held for the lifetime of the trust beneficiaries.
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