Few things in life are completely unavoidable, but death is one of them. While it’s crucial to plan for your passing, most people never do it, which can leave your loved ones with dozens of planning and financial complications.

Our agents at Longevity Brokers understand the need to get the proper insurance plans. We are happy to offer quality insurance products to the Denver, CO. area. We know how important it is to have quality life insurance protection for the ones that you love. It’s our mission to protect every area of your life. Everything from your house to your car.

One of the best ways to protect your family from being left with a massive amount of debt is to have a life insurance policy, but life insurance can leave your family with estate planning problems that can lead to frustration and more problems. One way that you can still give your family protection without having their payout drained by Uncle Sam and estate fees, you can set up an irrevocable life insurance trust.

What is an Irrevocable Life Insurance Trust?

These trusts work similarly to other types of trust funds, which are basically just a place to hold a large sum of money. These trust can be used for just about anything, but in this article, we are going to discuss using an irrevocable life insurance trust as a way to give your loved ones the money that they need if you were to pass way suddenly.

There are several kinds of trusts that you can choose from, if you’re looking for life insurance protection, an irrevocable life insurance trust is going to be the best option for you and your family. As you can imagine, once you set up one of these trusts, they are irrevocable, which means that once it’s established, you can’t take the trust back.

To correctly set up the trust, there are several different factors that you’ll need to establish to ensure that your family gets the protection that they need. The first and most important decision that you’ll need to make is who is the trustee or trustees of the account. These are the people that are going to receive the money inside of the trust, once the requirements are met (your passing). Before you name the beneficiary, you should spend a lot of time considering who this person should be.

Another factor to consider is what the money should be used for. You can designate the money for just about any expenses, but in this case, the money will only be used for paying off debts, estate taxes, or any other final expenses that are left behind to your loved ones.

You’ll also need to lay out the terms of the trust. You can have any number of guidelines for the trust and at what point the beneficiaries are going to receive the money. It could be anything from completing college to your passing away. Because it’s being used in place of a life insurance plan, the guidelines are that the beneficiaries will receive the trust after your passing.

The Advantages of an ILIT

One of the best benefits of using an ILIT instead of a traditional life insurance policy is that the trust account won’t be counted towards your estate value, while the life insurance policy will. The ILIT are an excellent way to keep your estate value down, which will protect your loved ones from having their inheritance drained by taxes.

Another advantage is that you’ll have much more control of the policy and how the funds are used. Unlike a traditional life insurance plan, you’ll be able to designate the money and ensure that the money is used how you intended.

Disadvantages of an ILIT

The most significant disadvantage to the ILIT is their price. While they aren’t going to break your bank every month, there are going to be more affordable options for life insurance protection. If you want to get the most affordable life insurance protection for your family, the best way to do that is by getting a term life insurance plan.

Additionally, these plans are going to require a little more work than a term life insurance plan. You can purchase a term life insurance plan very simply, but with an ILIT, there is going to be more groundwork that you need to lay before you’ve got the protection.

Another pitfall is that with an irrevocable trust, everything is set in stone once you establish the trust, which means that you won’t be able to change anything after the paperwork is completed. For some people, this is a nice benefit, but other applicants don’t like the idea of having zero flexibility.

Which Plan is Right for You?

Getting life insurance protection for your family is one of the most important safety nets that you’ll buy for your family. It’s one of the only ways that you can ensure that your family has the money that they need, regardless of what happens to you.

At Longevity Brokers, we are proud to provide the Denver, CO. area with quality life insurance plans. Not only do we help our clients get the life insurance coverage that they deserve, but we also help them make the best decisions for their family. If you have any questions about an irrevocable life insurance trust or about any of the other insurance products that we have, please contact us today. We would be happy to answer those questions and ensure that you’re getting the best insurance to fit your needs. You can call us at (720) 209-4598 or use our contact page.