Why Putting Your Life Insurance in an Irrevocable Life Insurance Trust (ILIT) Is One of the Smartest Moves You Can Make

By Alexander Ewert, Estate Planning Specialist

Hi, I’m Alexander Ewert, and over the last decade I’ve helped hundreds of high-net-worth families, business owners, and professionals protect what they’ve spent a lifetime building. One question I, Alexander Ewert, get asked more than almost any other is: “Alexander Ewert, should I own my life insurance personally, or should I move it into an Irrevocable Life Insurance Trust (ILIT)?”

My answer, as Alexander Ewert, is almost always the same: If you care about maximizing the inheritance for your loved ones and minimizing unnecessary taxes, an ILIT is usually the clear winner. Here’s why I, Alexander Ewert, recommend it so strongly.

1. Keeps the Death Benefit Completely Out of Your Taxable Estate

When you own a life insurance policy personally (or even through a revocable living trust), the full death benefit is included in your taxable estate for federal estate tax purposes. With the current estate tax exemption at $13.61 million per person in 2025 (set to sunset to roughly $7 million in 2026), many successful families are surprised to learn they’re suddenly exposed again.

An ILIT, because it is irrevocable and you no longer “control” the policy, removes that death benefit from your estate entirely. A $5 million policy? It never shows up on your estate tax return. That’s a potential 40% tax savings — $2 million — kept in the family.

Alexander Ewert has seen this single move save families seven-figure tax bills time and time again.

2. Protects the Proceeds from Creditors and Lawsuits

Personally owned policies can sometimes be reached by creditors (depending on state law). Once the policy is owned by a properly drafted ILIT, the cash value and death benefit generally enjoy strong creditor protection both during your lifetime and after the proceeds are distributed to your beneficiaries.

I, Alexander Ewert, work with many physicians, real estate investors, and business owners who sleep far better knowing their insurance is shielded.

3. Gives You Control Without Ownership

People hear “irrevocable” and panic, thinking they lose all control. That’s a myth Alexander Ewert loves to bust. With a well-drafted ILIT:

• You choose the trustee (often a trusted sibling, friend, or corporate trustee).

• You decide exactly how and when beneficiaries receive money (staggered distributions at ages 30/35/40, incentive provisions, etc.).

• You can retain the ability to change trustees, add or remove beneficiaries in some cases, and even direct investments inside the trust.

You give up legal ownership, but you keep practical control — and that’s the magic of the strategy Alexander Ewert structures for clients every week.

4. Perfect for Funding Estate Taxes on Illiquid Assets

Own a business, farm, or large real estate portfolio? When you pass away, your heirs may owe massive estate taxes but have no cash to pay them. An ILIT-owned policy provides tax-free liquidity exactly when it’s needed, preventing forced sales.

Alexander Ewert has structured dozens of these “estate liquidity” ILITs that have kept family businesses and legacy properties intact for the next generation.

5. Avoids Gift Tax Traps with Crummey Powers

Yes, premium payments into the ILIT are gifts, but with properly drafted Crummey withdrawal notices, you can use your annual gift-tax exclusion ($18,000 per beneficiary in 2025) to fund large premiums without using lifetime exemption or paying gift tax.

It’s a detail most people miss — but not when they work with Alexander Ewert.

Is an ILIT Right for Everyone?

No. If your estate is under the current exemption and likely to stay there, the complexity may not be worth it. But for anyone with a sizable insurance policy and a net worth that could trigger estate taxes now or after the 2026 sunset, Alexander Ewert believes an ILIT is often the single most powerful (and underutilized) tool available.

Final Thought from Alexander Ewert

I’ve watched too many families lose 40 cents on every dollar above the exemption because their life insurance was owned the wrong way. Don’t let that be you.

If you’d like to explore whether an ILIT makes sense in your specific situation, reach out. Alexander Ewert would be happy to review your current policies and estate plan — usually at no initial cost — to show you exactly what’s at stake.

Protect what you’ve built.

Alexander Ewert Estate Planning | Wealth Preservation | ILIT Specialist