Raleigh Irrevocable Life Insurance Trust (ILIT) Attorney

Keep insurance out of the estate

Many people are surprised to learn that life insurance they own is counted in their taxable estate. A $5 million policy in a taxable estate costs the family $2 million in tax. The same policy owned by an irrevocable life insurance trust is tax-free, and the trust can use the proceeds to provide the cash an estate needs.

How it works

The trust applies for and owns the policy (or an existing policy is transferred to it, subject to a three-year rule). Each year you give the trust the money for the premium. The beneficiaries receive a short written notice of their right to withdraw the gift, which makes it qualify for the annual gift tax exclusion. These are called Crummey notices, and we prepare them for you.

At death the proceeds are paid to the trust, not to your estate. The trust can buy assets from your estate or lend to it, giving your executor cash to pay taxes and expenses without selling the business or the real estate. The proceeds then stay in trust for your spouse and children, protected from creditors and from estate tax at the next generation.

Who should consider it?

• Anyone whose life insurance, added to everything else, pushes the estate over the exclusion.
• Business owners and real estate investors whose estates will need cash.
• Families using a charitable remainder trust who want to replace the value going to charity.
• Parents who want to equalize an inheritance between a child who will take over the business and one who will not.

How we price advanced planning

Advanced planning is priced case by case. These trusts are significantly more complex than a standard revocable trust or a Medicaid asset protection trust: each one involves tax modeling, valuation, coordination with your CPA and financial advisor, and years of administration that the document has to anticipate. For that reason, they are not on our flat-rate menu. After your consultation, we quote a flat fee for your specific plan, so you still know the full cost before any work begins.

Common questions

Can I be the trustee of my own ILIT?

No. The insured cannot hold any control over the policy without bringing it back into the estate. A spouse, an adult child, a trusted advisor or our firm typically serves.

What if I stop paying premiums?

The trustee can reduce the coverage, use cash value, or let the policy lapse. The trust never obligates you to keep paying.

What is a survivorship policy?

A policy on both spouses that pays at the second death, when the estate tax is actually due. It is usually less expensive than two individual policies and pairs well with an ILIT.

Learn More Today

Schedule a consultation with Kevin Peach. We will tell you plainly whether advanced planning is right for your family and quote a flat fee for your plan. 

Call (919) 759-6353 today to schedule an initial consultation with our firm.

Disclaimer: This page is general information about North Carolina and federal estate planning, not legal advice, and does not create an attorney-client relationship. Exemption amounts are as of 2026 and change annually. Every plan depends on the client's facts, and no result is guaranteed.