Irrevocable life insurance trust guide
An irrevocable life insurance trust, commonly shortened to ILIT, is reviewed when a family wants tighter control over life insurance ownership and how death-benefit proceeds are managed. It is a specialized trust because the planning questions center on insurance ownership, premium funding, beneficiary access, and whether policy proceeds should remain outside the grantor's estate under the intended design.
Last reviewed: March 9, 2026
Reviewed against: trust and estate planning references listed on the sources page.
Publisher: Larry Trustee AI Editorial Team | hello@larrytrustee.ai
How an ILIT is usually structured
The trust is set up as an irrevocable structure, a trustee is appointed, and the trust either applies for a new policy or receives ownership of an existing one. The trust language explains who benefits from the policy proceeds, what discretion the trustee has, and how distributions should be handled after the insured dies.
Why people compare an ILIT with other trusts
- To separate life insurance ownership from general estate ownership.
- To control how proceeds are distributed to children or other beneficiaries.
- To coordinate insurance liquidity with a broader estate planning strategy.
- To compare a specialized insurance trust with a broader irrevocable trust.
What should be reviewed before using one
- Whether the policy should be newly issued or transferred into the trust.
- Whether premium funding and notice procedures are practical for the family.
- Whether the beneficiaries need staged distributions or trustee discretion.
- Whether the insurance trust should coordinate with other trust structures already in the plan.