Life insurance can be great in managing taxes.  If you’ve gotten enough wealth that you expect your estate to be taxed at either the state or federal level, making life insurance in a trust is beneficial.  At the current time, you can pass $11.18 million to your kids separate from paying any federal estate tax. Life insurance allows crews to provide funding to cover estate taxes in addition to gives other chances to protect that money. An irrevocable life insurance trust, known as an ILIT, is a great planning technique, in addition to a great way to provide a source of ready cash.  Available cash can be used to pay estate taxes on a property or business, in addition to allows the cash to transfer to your kids outside your estate. Without this source of funds, heirs may be made to sell off real estate, bonds, family stocks or a family business, simply to raise reasonable cash to cover estate costs. Bad timing, such as a decreasing stock market or depressed real estate values could lead to the liquidation of assets at a low value.  A huge advantage of an irrevocable life insurance trust is that the assets which includes in the trust are not considered section of your estate for federal/estate tax purposes. The kids aren’t expected to pay estate or inheritance taxes on the life insurance death benefits that are taken care of. While an irrevocable life insurance trust provides various tax pros, it is a complex legal arrangement.