Irrevocable Trusts

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Irrevocable Life Insurance Trusts

A well-planned estate includes more than just a will. An irrevocable life insurance trust is one option available to you to ensure that your property is distributed according to your wishes after your death. There are several advantages to using an irrevocable life insurance trust, and Don Ho Law has the estate planning expertise to evaluate your assets and design an estate plan to fit your needs and wishes.

What is an Irrevocable Life Insurance Trust?

An irrevocable life insurance trust is a trust which is the beneficiary of your life insurance policy. This means that the proceeds of your insurance policy will be transferred to the trust when you die. Generally, the proceeds of a life insurance policy are includable in your estate for tax purposes, but the irrevocable life insurance trust takes the insurance proceeds out of your taxable estate and gives them directly to the beneficiaries of the trust, avoiding estate tax, and getting money to your loved ones more quickly.

Irrevocable life insurance trusts also inject liquidity into your estate, so that cash is available to pay any of the fees and taxes that are a part of the probate process. This is especially helpful if your estate consists mostly of real property, such as homes or land, and personal property, such as antiques and jewelry. If there is not enough cash in the estate to pay taxes and fees, some of these items would have to be sold to raise funds. An irrevocable life insurance trust guarantees cash will be available for the purpose of paying these taxes and fees, preserving your estate property so that it can be distributed to family and friends according to your wishes.

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