Irrevocable life insurance trust structure

An irrevocable life insurance trust, often called an ILIT, is commonly diagrammed around four relationships: the grantor's gifts, the trustee's administration, the policy held by the trust and the trust's distributions to beneficiaries. The life insurance carrier pays the death benefit to the trust under the policy terms, while the trustee administers the proceeds under the trust agreement. A diagram helps a family or adviser distinguish the policy owner from the insured person and from the people who may benefit. It does not establish tax treatment or replace the signed documents. Funding methods, policy ownership, beneficiary rights and notices can have significant consequences, so use the current trust and policy records when preparing the diagram.