You may already have an arsenal of tools in your Las Vegas estate plan, each of them protecting you, your family and your assets. However, it never hurts to do even more to strengthen your overall protection.
An irrevocable life insurance trust (ILIT)is one way to increase your asset protection and potentially decrease hardships for your family after you die. If you have never heard of this type of trust, it is time to discover its many benefits.
What is an irrevocable life insurance trust?
The ILIT is a trust into which you can place your life insurance policies, making the trust itself the owner of such policies. When these trusts are created and managed correctly, they effectively reduce the size of an estate. In turn, it also reduces your tax liabilities. Other ways an ILIT can benefit you and your family include:
The beneficiaries of an ILIT can still qualify for government aid like Medicaid
If correctly administered, it can help you avoid gift tax consequences
An ILIT protects the cash value of your life insurance policies from creditors
It gives you control over when, why and how your beneficiaries receive life insurance proceeds
As part of an estate plan or wealth management program, an ILIT can help with your asset preservation and beneficiary disbursement goals. However, since this trust is irrevocable, you cannot make changes once you have finalized the document. As such, it is vital to make sure it fills your needs before finalization.
We also recommend familiarizing yourself with this and other types of trusts available to Nevada residents. Learning more can help you select the estate planning tools that best benefit your unique circumstances.