Top 10 Benefits of an Irrevocable Life Insurance Trust (ILIT)

For high-net-worth people, an ILIT is a powerful estate planning tool. Here are the real advantages — no fluff.

1. Removes Proceeds from Taxable Estate  

Death benefit avoids federal estate taxes (up to 40% on large estates).

2. Avoids Generation-Skipping Tax  

Assets pass to grandchildren or further without extra taxes.

3. Strong Creditor Protection  

Proceeds shielded from lawsuits, bankruptcy, or divorce claims.

4. Liquidity for Estate Taxes  

Trust loans or buys assets to pay taxes — no forced sales.

5. Controls Beneficiary Distributions  

Staggered payments protect spendthrift or special-needs heirs.

6. Preserves Government Benefits  

Funds don’t count against Medicaid/SSI for disabled beneficiaries.

7. Leverages Gift Tax Exclusions  

Use Crummey powers for tax-free premium gifts (£18,000/person indexed).

8. Professional Trustee Management  

Independent trustee handles investments and distributions objectively.

9. State Estate Tax Savings  

Avoids state taxes in high-tax areas.

10. Multi-Generational Transfer  

One policy funds trusts for children, grandchildren, charities — tax-efficient legacy.

ILITs are irrevocable and complex — not for everyone. For estates over £5–10M, tax savings can be millions. Consult a professional. This isn’t advice.