Irrevocable life insurance trust can serve many purposes. Here is a list of a few of these. Among these is that in the case where an irrevocable life insurance trust would be properly drafted, this would provide liquidity to help in the paying of estate taxes. Regarding this, you should also note that having this liquidity, one could also utilize it to pay off other expenses and debts. This would work by using a loan to purchase assets from the grantor’s estate. Also to what you should also know is that through lifetime gifts, this would help reduce taxable estate through the transfer of assets into an irrevocable life insurance trust. In this case where you would be looking to learn the reasons for an irrevocable life insurance trust, as to what you should also know is that by properly drafting this trust, one is able to avoid gift tax consequences. You'll want to be familiar with situations of incidents of ownership.
This is so as the contributions that would be made by the grantor would be considered gifts to the beneficiaries. You should take note that as to what one would have to do to avoid gift taxes would be for them as a trustee to use a Crummey letter and notify the beneficiaries of the trust of their right to withdraw a share of the contributions. This would be for a period of thirty days after which as a trustee, you could use the contributions to pay the premium insurance policy. Now that you would be looking to learn as to what the reasons for having an irrevocable life insurance trust are, as to what you should also know is that by having a life insurance policy that would be owned by this trust, one could be able to protect the benefits of a trust beneficiary receiving aid from the government. You'll want to know how to legally identify primary residence.
Different states would be having different rules as well as limits on how much cash value or death benefit is protected from creditors. In the case where you would be having any coverage above this and which would be held in the form of an irrevocable life insurance trust, as to what you should know about this is that it would be protected from the creditors of the grantor or the beneficiary. The other reason for an irrevocable life insurance trust that you should note down is that a trustee of this insurance trust would behave discretion powers that would allow them to make distributions as well as control the proceeds of the policy. Here's how to select an estate planning lawyer: https://youtu.be/8Z7gK6TGY4U