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Houston Irrevocable Life Insurance Trust (ILIT) Attorney

Irrevocable Life Insurance Trust

An ILIT can help reduce your taxable estate

 Many people mistakenly believe that life insurance proceeds are not subject to Federal Estate Taxes. While the insurance proceeds are received by your beneficiaries free of any income taxes, they are countable as part of your overall taxable estate for Estate Tax purposes. Therefore, if your estate is greater than the applicable exclusion amount, depending on the value of your estate, your beneficiaries could lose close to half of the estate’s value which is over and above the applicable exclusion, to estate taxes. 

What is an Irrevocable Life Insurance Trust?

An Irrevocable Life Insurance Trust (ILIT) is a trust established specifically for the purpose of owning your life insurance policy. A properly established and administered ILIT holds the policy separate from your estate and keeps the proceeds from being included in your gross estate. The proceeds from the insurance policy can then be used to provide your estate with the liquidity to pay estate taxes, pay off debts, pay final expenses and provide income to a surviving spouse, child or other beneficiary.  The ILIT will be the policy owner and beneficiary.  Once your ILIT is created, you can use your annual gift tax exclusion to make cash gifts to your trust. Your beneficiaries forgo the present gift (in lieu of the future proceeds) and the trustee uses the gift to pay the premium on the life insurance policy.

Customizing an ILIT

Many options are available when setting up an ILIT.  By way of illustration, ILITs can be structured to distribute income to a surviving spouse with the remainder going to your children or perhaps your children from a previous marriage.  Also distributions can be paid over a period of time to a financially irresponsible child.

Contact Schnurr Law Firm for Complex Estate Planning in Houston, TX

We assist with sound estate planning and can help save on estate taxes. Contact our office to schedule an appointment to see if an Irrevocable Life Insurance Trust (ILIT) is right for you and your family.


Schnurr Law Firm, PLLC serves clients throughout the greater Houston area, including, but not limited to Houston, Bellaire, West University, Sugar Land, Missouri City, Richmond, Rosenberg, Katy, Cypress, The Woodlands, Kingwood, League City, Webster, Clear Lake, Pearland, Angleton, and throughout Harris County, Fort Bend County, Montgomery County, Brazoria County and Galveston County.



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| Phone: 713-662-2889

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