An ILIT is Protected from Creditors
One of the great benefits of an ILIT is the protection it provides from creditors. When a person dies, commonly there are debts owed to medical providers, credit card companies, etc. Creditors who are owed money can demand payment from the estate of the deceased individual. If life insurance is placed or purchased in an ILIT, the creditors cannot reach the life insurance proceeds to satisfy his debts or those owed by his estate.
The opposite occurs if an individual owns life insurance outright. In that case the life insurance proceeds are part of the estate assets and then creditors can demand payment following some exemptions allowed for the family members of the decedent.
Central Management of Trust Assets
An ILIT also allows for central management of all assets in addition to the life insurance proceeds. In some cases using a professional trustee who has the expertise to manage trust assets to preserve and grow trust assets. While there are fees associated with establishing and managing trust assets, the benefits typically outweigh the costs of the fees.
Get Legal Help
Experienced Estate Planning Attorney Elga Goodman will help you create an estate plan including trusts which protect your assets, your goals, and your loved ones. Contact us today at 973-841-5111.
Posted in: Estate Planning, New York Estate Planning