ILITs are constructed with a life insurance policy as the asset owned by the trust. Once the grantor contributes property or life insurance death benefits to the trust, he or she cannot change the terms of the trust or reclaim any of the properties held within.
As an alternative to naming an individual beneficiary, ILITs offer several legal and financial advantages to heirs, including favorable tax treatment, asset protection, and the assurance that the benefits will be used in a manner concurrent with the benefactor's wishes.