Irrevocable Life Insurance Trust Structure

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.

Tipo Struttura delle entitàStandard Tier-based ownership hierarchyMotore schematex-entityAggiornato 24/09/2026

La richiesta

“Create an irrevocable life insurance trust structure showing Avery Morgan's annual gifts to the trust, an independent trustee, a $2M life insurance policy, the carrier's death benefit, and distributions to Morgan's children.”

Prova alloraAdd a spouse as an income beneficiary.Change the policy amount to $3M.

Cosa contiene questo disegno

Leggi le decisioni che ne stanno alla base.

01Funding

Show annual gifts to the trust.

02Administration

Identify the independent trustee.

03Policy

Show the trust's insurance policy.

04Proceeds

Trace the death benefit and distributions.

Use this as a conceptual ILIT diagram. Tax treatment, ownership and notice requirements need review with qualified legal and tax advisers.

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FAQ

Domande frequenti

What does an ILIT diagram show?

It shows the grantor, irrevocable trust, trustee, policy, insurer and the path from gifts and proceeds to beneficiaries.

Who owns the policy in this example?

The trust is shown as owning the policy; the diagram should be changed if the policy records state otherwise.

Why is the insurer separate from the trust?

The carrier issues the policy and pays its death benefit, while the trustee administers the trust and its proceeds.