If you own a life insurance policy with a significant death benefit, an irrevocable life insurance trust may be of substantial benefit to you.

​A life insurance policy owned by you on your life at the time of death will be included in your taxable estate and subject to federal estate tax if your estate is the beneficiary or you possess certain ownership rights ("incidents of ownership").

A commonly used technique to avoid inclusion in your estate as the insured, is to create an irrevocable life insurance trust (ILIT) to own the policy and receive the policy proceeds on your death.

A properly drafted and administered life insurance trust removes the life insurance proceeds from the gross estate of the insured, while also making those proceeds available as a source of liquid funds for the payment of estate taxes and other obligations.