ILIT Funding
Estate Tax Comes Due. The ILIT Pays It Untaxed.
An Irrevocable Life Insurance Trust owns and is the beneficiary of a life insurance policy on the grantor — the structure that keeps the death benefit outside the taxable estate. Done correctly, an ILIT delivers liquidity to heirs the moment estate tax comes due, without the death benefit itself being taxed at the federal estate-tax rate. The federal exemption is scheduled to step down in coming years; California’s growing high-net-worth population is staring directly at the result. The trust is the wrapper. The policy is the liquidity. Both have to be funded correctly.
Begin a conversation →Three products. One trust to fund.
Inside an ILIT, three products do most of the work. The right choice depends on the size of the estate, the time horizon, and whether the tax liability triggers at first death or second.
Defined window. Lower premium.
Term inside an ILIT is rare but real — used when the estate-tax exposure is bounded by a finite window (gifting strategy in motion, business sale planned, exemption sunset bridged). The trust holds the term, premium load is low, conversion privileges preserved.
- Lowest premium per dollar of death benefit
- Suitable when exposure has a finite horizon
- Conversion to permanent stays available inside the trust
The workhorse product. Permanent and guaranteed.
Guaranteed Universal Life is the standard ILIT funding vehicle. Permanent coverage, lapse-protected to age 100 or 121, with the lowest premium of any guaranteed-permanent option. Designed for the estate-tax liability that doesn’t go away.
- Permanent coverage with lapse-protection guarantee
- Lowest premium for a guaranteed permanent death benefit
- Standard placement for single-life estate liquidity
Joint policy. Pays at second death.
Survivorship Universal Life insures two lives — typically spouses — and pays the death benefit at the second death, which is precisely when federal estate tax triggers under standard portability planning. Materially lower premium than two single-life policies.
- Insures two lives, pays at second death
- Aligns timing with federal estate tax under portability
- Significantly lower premium than two single-life policies
Estate tax is due in nine months. Cash needs to be ready.
If any of these describe your situation, an ILIT funded with the right product — coordinated with your attorney and CPA — is the difference between a tax bill paid from cash and a tax bill paid by a forced sale of family assets.
- i. Your estate is approaching or above the federal exemption — and the exemption is scheduled to step down further.
- ii. Your largest assets are illiquid — a business, real estate, a closely-held company — and your heirs would have to sell to cover estate tax.
- iii. Your attorney has drafted an ILIT, but the policy is being placed by a generalist who hasn’t reviewed it through the estate-tax lens.
- iv. You already own a policy outside an ILIT, and you’re inside the three-year lookback window where ownership transfer still counts.
ILIT funding, handled with your estate team.
Remain Life Insurance Services, LLC structures term, GUL, and survivorship UL options inside an ILIT context — with three-year lookback tracking and Crummey notice administration support for the trustee — in coordination with the family’s estate attorney and CPA.
Request an ILIT funding analysis, or speak with a Remain advisor directly.