More Folks Are Setting Up ILITs & Other Trusts Ahead of 2026. Find Out Why.
Irrevocable life insurance trusts (ILITs) could be uniquely advantageous and offer greater peace of mind if set up before Jan. 1, 2026. That’s because ILITs may provide a more effective way of reducing the value of an estate and preserving life insurance benefits while federal estate tax exemptions remain at their current rates.
Within two years, however, those higher rates could disappear, as lifetime estate tax exemptions are on track to drop by roughly half in 2026 if nothing changes between now and then.
With that, the options for mitigating federal estate taxes and protecting assets like life insurance payouts could be far more limited — and possibly less attractive.
Here’s why, with a closer look:
This ILIT guide explains the ins and outs, pros and cons, and general uses of irrevocable life insurance trusts in less than 3 minutes to get anyone up to speed with this estate planning option.