What Is Life Insurance Trust? 
A life insurance trust is a term often used to describe an irrevocable life insurance trust -LRB- ILIT -RRB- . An ILIT is a form of trust drafted by an estate planning attorney in situations where it is intended that life insurance be held outside the client 's taxable estate . Such life insurance proceeds are usually planned to help pay estate taxes without having to sell existing estate assets . Otherwise , any life insurance owned by the client in their taxable estate would needlessly increase the value of the estate for estate tax purposes subjecting the estate to even higher estate taxes . With recent changes in estate tax exemptions , most individuals will not have to resort to ILIT in their estate plans unless their attorney suggests it for other non tax planning reasons . 