Contrary to what many people think, the proceeds of life insurance policies are not tax free. That does not necessarily mean that an estate will have to pay tax on the proceeds though. An irrevocable life insurance trust (ILIT) is a useful estate planning tool to reduce tax liabilities. ILITs are designed to own life insurance policies. They are not just for wealthy people. People with modest means can use them – including people with virtually no assets other than a sufficiently large life insurance policy in a state with an estate or inheritance tax. |
Publications >