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Can I add a new life insurance policy to an existing ILIT (Irrevocable Life Insurance Trust)?
Chicago, IL
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Posted 4 months ago in Trusts
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I am the original Trustee of an ILIT that was created ten years ago. My parents are the original Grantors and the ILIT currently owns four policies with my father as the insured and one "second to die" policy with both my parents as insureds.
Three years ago, my parents divorced. I know the ILIT survives the divorce, but I was wondering if I, as Trustee, should purchase a new life insurance policy for my mother in the name of the existing ILIT, which grants the Trustee broad powers to "add to the trust estate at any time." I'd rather not write a new ILIT, open a new bank account, etc. if such steps are not necessary and the original ILIT will suffice. Thank you! Answers (1)
Frank A Selden
This attorney is licensed in Washington.
Posted 4 months ago.
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Should? That doesn't sound like a legal question. Based on the partial provision you quote you "may". THe primary legal issue for me is to make sure the policy conforms to the terms of the trust, is paid for by the proper funds so as not to inadvertently drag the policy into the value of her estate. I recommend you get with your life insurance agent and see if a new policy will fit the trust. Their legal department might want to have a look at it and then you will get your conclusive answer. In general yes, you can add a policy but numerous details need to be considered.
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