Why Write Life Insurance In Trust? 
There are two main life insurance trusts that people use - revocable and irrevocable life insurance trusts . People use life insurance trusts because there are tax advantages that they offer , they protect the proceeds , and helps you distribute the assets to your children at the least possible cost . An irrevocable life insurance trust -LRB- ILIT -RRB- is a legal document set up to distribute life insurance proceeds in a specific manner , depending on how the trust is designed . ILITs receive special tax consideration from the IRS that is not given to life insurance policies that would otherwise be owned by a natural person or revocable trust . Since the trust is irrevocable , the terms of the trust can not be changed -LRB- think of it like putting the contents in a vault and throwing away the key - it ca n't be opened til the insured dies -RRB- . An ILIT can offer many substantial advantages to protect life insurance proceeds . It can also help you distribute your property to your children at the least possible cost . If you have a taxable estate , you have a choice - pay the tax with your own money or pay only a fraction of the tax and use someone else 's money to pay the rest . If you want to use someone elses money to pay the tax , you can buy a life insurance policy . The type of life insurance policy will depend on the specific circumstances , but is usually a survivorship universal life policy if used for estate tax purposes . The life insurance policy may be secured for pennies on each dollar of tax that you owe . By putting the life insurance policy in an irrevocable trust , the proceeds become available to pay taxes due upon death . A life insurance policy that you purchase will require the same premium whether you put the policy in the trust or keep it outside of the trust . If you put the policy in the trust , the death benefit is not included in the calculation of the size of the estate . This is a huge tax savings , especially if the proceeds are several million dollars . If you keep the policy outside of the trust , the proceeds will be included in calculating the size of the estate potentially increasing the size of the estate by a big margin , and you may therefore have to pay much higher estate taxes before any of the property can be distributed to your children or other beneficiaries . Please let me know if I can be of further assistance . Thanks very much . 