The Irrevocable Life Insurance Trust (ILIT) Checklist
The Irrevocable Life Insurance Trust (ILIT) is typically used to get thevalue and proceeds of an insurance policy out of an estate so they’re nottaxed for federal estate tax purposes. The use of ILITs is notcomplicated, but there are some administrative hoops to jump through.Your estate planning attorney can do much of the jumping throughhoops on your behalf.Here’s the Irrevocable Life Insurance Trust checklist for the grantor,insured, trustee, and estate planning attorney. The estate planningattorney will provide direction as to who does what and when:1.Submit to medical exam to ensure you’re insurable for a priceyou’re comfortable with.2.Select a trustee (and successor trustees)3.Design, draft, and execute the ILIT document4.Fill out the IRS SS-4 form to obtain an EIN (federal tax number)for the ILIT. This can be done online.5.Open a non-interest bearing checking account in the name of thetrust.6.Gift enough cash to the trust to pay for the life insurance premium.7.Send Crummy notices to beneficiaries, if desire to qualify gifts totrust under the grantor’s annual applicable exclusion amount.8.Trustee will apply for insurance policy.9.After Crummy acknowledgements are received or withdrawal timehas expired, pay the life insurance premium.