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Tom Meaglia, ChFC®, AEP®, CLU®, MSFS

Chartered Financial Consultant

Investment Advisor Representative

CA Insurance Lic. #0567507


Meaglia Financial Consulting

2105 Foothill Blvd., #B140, La Verne, CA 91750


Toll Free: 800-386-3700

Bus:         909-593-6105

Cell:         818-681-8600

Fax:         909-593-6120




January/February 2022

Why Use an Irrevocable Life Insurance Trust?

Why Use an Irrevocable Life Insurance Trust

All life insurance policy proceeds are paid income-tax free and can provide immediate cash to pay final expenses and income for survivors. So why would you consider an irrevocable life insurance trust (ILIT)?

Privacy and Protection
Policy proceeds avoid probate, which is a public proceeding and protects the benefit amount from your beneficiaries’ creditors.

Reduce Estate Taxes
When you place a policy into the trust, you transfer ownership of that asset to the trust, effectively reducing the size of your estate and any estate tax you may owe.

Setting Up the Trust
ILITs have complex rules so work with your estate planning attorney to create an irrevocable trust and help you to name a trustee. You’ll set the terms of the trust, specifying who will have control, how premiums will be paid, who will benefit and how payments will be distributed. Your decisions are final because retaining any control over the policy after it’s transferred to the trust will result in the policy being included in your taxable estate.

The trust must be in existence for three years prior to your death to avoid estate taxes on the death benefit. You may be able to prevent this by having the trust purchase a new policy instead of transferring an existing one.

Paying the Premiums
You have options for paying the premiums on the life insurance policy you transfer to the trust. You can continue making the premium payments yourself or purchase a single premium policy so that no further payments will be due. Another option is to give money for premiums to someone else to make the payments. However, this could trigger gift taxes if the payments exceed the gift tax exemption amount.

Consider Disadvantages
Before you decide to create a life insurance trust, consider the drawbacks. Once created, the trust is irrevocable. You can’t borrow from the policy. You also can’t change the beneficiaries, so if family dynamics or friendships change, the beneficiaries you named when you created the trust will still receive the policy proceeds.


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Investment advisory services are offered through Fusion Capital Management, an SEC Registered Investment Advisor. The firm only transacts business in states where it is properly registered, or is excluded or exempted from registration requirements. SEC registration is not an endorsement of the firm by the commission and does not mean that the advisor has attained a specific level of skill or ability. All investment strategies have the potential for profit or loss.
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