Life Insurance Trusts: An Estate Planning Tool With Many Benefits
Last updated on April 9, 2025
Life insurance policies often hold substantial financial value. However, when they are part of the insured’s estate, they may be subject to estate taxes upon the insured’s death. This tax burden can significantly reduce the amount passed on to beneficiaries. An irrevocable life insurance trust (ILIT) is a powerful tool for shielding the proceeds from taxes, ensuring that more of the policy’s value benefits your loved ones rather than the government.
Our attorneys at the Law Offices of Berge & Berge can help you explore a life insurance trust as part of a comprehensive estate plan. We focus solely on estate and elder law. Our lead attorney holds an advanced degree in tax law and is a board-certified specialist in estate planning, trust and probate law.* Our lawyers handle life insurance trusts and other types of trusts for clients throughout the South Bay area.
What Is A Life Insurance Trust And How Does It Work?
A life insurance trust is a tool specifically designed to own and manage your life insurance policies. Here are some of the key benefits of an irrevocable life insurance trust (ILIT):
- Estate tax reduction: Removes the policy from your taxable estate, potentially saving significant amounts in estate taxes
- Asset protection: Shields the life insurance from creditors and legal claims against the estate
- Control over distribution: Allows you to set specific terms for how the proceeds are distributed among your beneficiaries
- Probate avoidance: Protects the trust property from the burdensome probate process
A life insurance trust can also be valuable in special needs planning and conservatorship of an incapacitated person’s estate.
*Through the California Board of Legal Specialization
Maximize The Value Of Your Estate With An ILIT
If you’re considering incorporating a life insurance trust into your estate plan, let us help you execute it effectively and in alignment with your estate planning goals. We can inform and empower you to protect your legacy.
Learn more by calling 669-244-3546 to reach our San Jose office or send us an email.
If you are looking for personal, certified, ongoing attention during your estate planning, probate, conservatorship or guardianship issue, we can help. Call 669-244-3546 or email us to find out what our San Jose estate planning law firm can do for you, your family and your future.