Irrevocable Life Insurance Trust for Single Individual (Trusts for Children) (IL)
Summary
This template is an irrevocable life insurance trust (ILIT) designed for use by an unmarried individual in Illinois. A settlor would use an ILIT to hold life insurance policies on their life in order to prevent the proceeds from being includible in the settlor's taxable estate on death. This template contains practical guidance, drafting notes, alternate clauses, and optional clauses. An ILIT is an irrevocable trust established to be the beneficiary of a life insurance policy. If the premiums are gifted to the trust, then the life insurance proceeds will not be included in the settlor's estate for federal estate tax. There is a common misconception that life insurance proceeds are not subject to federal estate taxes. While the proceeds are free from income tax, they are countable as part of settlor's taxable estate. An ILIT can be created specifically for the purpose of owning the settlor's life insurance policy. The ILIT holds the policy outside of the settlor's estate and keeps the ...