Life insurance is one of the most caring gifts you can leave, a way to make sure your family in Palm Beach is financially steady when you are no longer there to provide. An Irrevocable Life Insurance Trust, often called an ILIT, is a tool that can make that gift even more protective and intentional. It is not for everyone, but for the right family it brings real peace of mind.
What an ILIT Actually Is
An ILIT is an irrevocable trust created under Florida’s Trust Code (Chapter 736) that owns a life insurance policy on your life. Instead of you owning the policy directly, the trust owns it. When you pass away, the death benefit is paid into the trust, and your trustee distributes it to your beneficiaries according to the rules you set when you created the trust. Because the trust, not you, owns the policy, the proceeds are handled with structure rather than landing in a beneficiary’s lap all at once.
Why Florida Families Consider One
Here in Florida, the appeal of an ILIT is usually not about state death taxes, because Florida has no estate tax and no inheritance tax. The reasons are more personal and practical. An ILIT lets you control how and when the money is used, which is invaluable if you are providing for young children, a beneficiary who is not ready to manage a large sum, or a loved one with special needs whose benefits could be jeopardized by an outright inheritance. For larger estates, an ILIT can also keep the policy proceeds outside your taxable estate for purposes of the separate federal estate tax, which is a conversation worth having if your wealth is significant.
The Trade-Off: Giving Up Control
The word irrevocable is important and should be respected. Once you transfer or create a policy inside an ILIT, you generally cannot take it back, change the beneficiaries yourself, or borrow against the policy. That permanence is the price of the protection it offers. For this reason, an ILIT is a decision to make thoughtfully, with a clear picture of your family’s long-term needs.
How It Works in Practice
Typically, you fund the trust by contributing money the trustee uses to pay the policy premiums. To keep those contributions working smoothly, the trust often gives beneficiaries a brief right to withdraw new contributions, a notice step that is easy to overlook but important to handle correctly. Your trustee, who should be someone organized and trustworthy, manages premium payments and, eventually, the distributions. Choosing the right trustee matters as much as the trust itself.
How an ILIT Fits Your Larger Plan
An ILIT does not replace your will, your revocable trust, or your Florida homestead planning; it works alongside them. For many Palm Beach families, the ILIT is one piece of a broader plan that also keeps the family home protected and avoids unnecessary probate. The goal is always the same: the right amount, to the right people, at the right time.
Talk With a Florida Attorney
An ILIT is a powerful tool, but it is also permanent, so it should be set up with care and only when it genuinely fits your goals. A licensed Florida estate planning attorney serving Palm Beach can help you decide whether an ILIT makes sense for your family and integrate it properly with the rest of your plan.
For more on our Florida practice, see our overview of estate planning in Boca Raton. Morgan Legal Group's affiliated New York office also handles how a will is contested in New York.