What is an irrevocable life insurance trust (ILIT)?

An irrevocable life insurance trust (ILIT) is a trust set up in North Carolina to hold a life insurance policy. The trust is irrevocable, meaning it cannot be revoked or changed after it has been established. The trust is usually set up by the insured for the benefit of their beneficiaries. When the insured person passes away, the trust is used to pay the beneficiaries any death benefits that are provided by the life insurance policy. The trust pays out directly to the beneficiaries, usually tax-free, so that the funds are not subject to probate. The trust also helps to protect the insurance policy and its benefits from creditors, so the beneficiaries are not at risk of losing their inheritance due to any debts or liabilities that the insured may have. The trust also ensures that the life insurance proceeds are only used for the intended purpose; this helps to protect the beneficiaries from any potential disputes that could arise. In North Carolina, an ILIT is an effective way to provide for your beneficiaries upon your death. The trust is an important part of the estate planning process, so it is important to consult with an experienced trusts and estates lawyer to ensure that your trust is set up properly and in accordance with the law.

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What is an irrevocable life insurance trust (ILIT)?

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