Irrevocable Life Insurance Trust Template

What Is the Irrevocable Life Insurance Trust?

An irrevocable life insurance trust is a specialized estate planning tool that removes life insurance proceeds from your taxable estate. When you own a $2 million life insurance policy personally and die, that $2 million gets added to your estate for tax purposes. An ILIT owns the policy instead. The death benefit passes to your family completely tax-free, saving estates facing federal or state taxes hundreds of thousands of dollars.

The trust also protects proceeds from creditors, divorcing spouses, and beneficiaries' poor financial decisions. You control exactly how and when beneficiaries receive distributions through customizable provisions for staggered payments, lifetime trusts, or immediate distributions. This template includes comprehensive Crummey withdrawal provisions that convert premium contributions into present-interest gifts qualifying for the annual gift tax exclusion.

 

 

Is This Irrevocable Life Insurance Trust Right for You?

You need this agreement if you're:

• Owning life insurance worth $1 million or more
• Facing potential federal or state estate taxes
• Wanting to protect proceeds from beneficiaries' creditors
• Planning distributions over time rather than lump sums
• Concerned about children receiving too much too young
• In a second marriage protecting children from prior marriages

You definitely need this agreement if:

• Your estate will exceed $13.99 million (federal exemption)
• You live in a state with separate estate taxes
• Your current policy is owned personally and unprotected
• Beneficiaries have creditor problems or financial immaturity
• You want professional management of multi-million dollar proceeds

 

 

Why Thousands Trust Legal GPS Templates

Save Money: Estate attorneys charge $3,000-$8,000 to draft an ILIT. Get the same protection for $35.

Save Time: Download immediately and complete in under two hours with our detailed guidance.

Look Professional: Courts and financial institutions accept our attorney-drafted templates without question.

Keeps You Out of Court: Comprehensive provisions including Crummey withdrawal rights, spendthrift protections, and tax savings clauses prevent IRS challenges and family disputes over proceeds.

 

 

 

Get Protected in 3 Simple Steps

Step 1: Secure Checkout

Complete your purchase through our secure payment system. Your template downloads immediately.

Step 2: Instant Download

Receive your attorney-drafted template in Microsoft Word format. Open it in Word or Google Docs and start customizing.

Step 3: Fill In the Highlighted Fields

Follow the bracketed guidance to complete beneficiary designations, distribution provisions, trustee selections, and Crummey withdrawal terms. Our detailed how-to guide walks you through every complex decision.

 

Frequently Asked Questions

Can I use this template multiple times?

Yes. Your purchase includes unlimited lifetime use. Create ILITs for different policies, update the trust as your family situation changes, or use it for multiple clients if you're an advisor. You own the template forever.

Is this contract legally binding?

Yes. This is the same irrevocable trust document estate planning attorneys draft for clients paying $5,000-$8,000. Courts, insurance companies, and the IRS recognize properly executed irrevocable trusts as legally binding instruments. Follow the instructions carefully, have both parties sign, and consider notarization for added formality.

What's the three-year rule for transferred policies?

If you transfer an existing policy you currently own into the trust, the IRS requires you to survive three years from the transfer date for the death benefit to be excluded from your estate. If you die within three years, the proceeds are included in your taxable estate. To avoid this rule, have the trust purchase a new policy on your life rather than transferring an existing one.

Do I need a separate trust for each life insurance policy?

No. One ILIT can own multiple policies on your life. You can also create a second-to-die ILIT that owns a joint policy on you and your spouse. The template accommodates multiple policies through Schedule A where you list all policies being transferred or purchased.

Can my spouse be the trustee?

Yes, but with limitations. Your spouse can serve as trustee if their distribution powers are limited to an ascertainable standard (health, education, maintenance, support). Avoid giving your spouse unlimited discretion to distribute assets to themselves, as this could cause estate inclusion. The template includes the proper limiting language.

What happens if I forget to send Crummey notices?

Your premium contributions won't qualify for the annual gift tax exclusion, potentially triggering gift tax consequences or using up your lifetime exemption. Crummey notices are legally required and must be sent every time you make a contribution. Missing notices can also give the IRS grounds to challenge the entire trust structure.