Trust owning life insurance

Terry Says

That really depends on the circumstances. Years ago, when the estate planning limit was lower (less than $1 million vs the $15 million for 2026), people purchased life insurance in an irrevocable trust (not the living trust) to keep the proceeds out of the estate for estate tax purposes.

But if your estate is going to be significantly less than that exemption (and your estate planning attorney will also consider STATE death taxes!), then you can have your RLT own the insurance. But again, that limit could change in the future. And many states have much lower estate tax limits (Illinois is $4 million). So if your trust owns the policy it is considered part of your estate — along with your home, IRA, etc. And it could put your estate into a vulnerable position.