SYNOPSIS: ILITs, when tailored to the needs of the ILIT creator (“grantor”), can offer many benefits, including blended family planning, family financial security, estate liquidity, creditor protection, and centralized wealth management for ILIT beneficiaries. With proper implementation and administration, the ILIT’s assets also should not be included in the grantor’s taxable estate. To assist grantors in making the appropriate choices to customize their ILITs, this report provides a brief summary and a checklist of various ILIT options.
TAKE AWAYS: ILITs serve as a multi-purpose tool for dynastic legacy and life insurance planning and can address a range of needs, from generating estate liquidity by purchasing assets from the estate to providing centralized wealth management for generations of beneficiaries. ILITs also must navigate among a wide assortment of product options to find their optimal coverage, which means these trusts must have flexible powers with regard to both policy acquisition and funding. Accordingly, ILITs 2 must incorporate a dizzying array of options for both trustees and beneficiaries. A checklist of potential choices can make the selection process less daunting.