Estate planning most commonly considers the property left behind by a recently deceased individual and how it should be disposed of, in addition to potential end-of-life situations and the care desired by the planner in the event of future incapacity. These topics can be challenging to contemplate, as they force the planner to contemplate their own mortality. Often overlooked is planning of a practical nature for how the family is to proceed in the immediate aftermath of the estate planner’s passing.
In California, there are legal mechanisms by which a person can effectively make arrangements for their own funeral services and the disposition of their remains. These topics can be even more difficult to contemplate, let alone establish concrete plans for. However, planning for funerary arrangements can not only keep important decisions in your hands but also provide significant benefits to your surviving loved ones. If you are able, it is prudent to make such arrangements during your own lifetime.
What is an Irrevocable Life Insurance Trust?
An irrevocable life insurance trust (ILIT) is a commonly overlooked and underutilized tool for individuals to ensure that funds adequate to cover funerary expenses will be available to their loved ones. An ILIT is a trust, but one that is funded posthumously by the proceeds of a life insurance policy. Upon your death, benefits paid out by your life insurance company can be placed directly in this trust. Importantly, ILIT funds may not be subject to certain tax burdens or other liabilities.
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