An Irrevocable Life Insurance Trust — ILIT for short — is a common estate planning tool, well known to attorneys and financial planners. In this article, Anthony Adams discusses some potential ILIT issues, such as what happens if the grantor stops contributing an amount sufficient to pay the annual premium or a beneficiary decides to take some or all of the money to fund the premium. This issue was addressed in Matter of Baron, reported out of Queens County Supreme Court last summer.

Snippet from the article:

The Baron case involved an irrevocable trust that Harry Baron created in 1992 to hold two whole-life insurance policies for the benefit of his children. Baron named a business associate, Roy Leibowitz, as trustee. Until 1998, Baron made annual gifts to the trust that Leibowitz used to pay the policy premiums. But the trust agreement didn’t require Baron to make those annual gifts, and after 1997 he stopped doing so. Click through for the full article.

Anthony J. Adams is a founding partner of Adams Leclair.