A trust designed to provide liquidity for an estate without increasing the size of the estate is a(n)____ trust.

Question

Quizplus · Accepted Answer

An irrevocable life insurance trust (ILIT) is designed to own a life insurance policy on the life of the grantor. The trust is designed to provide liquidity for the estate without increasing its value because the life insurance proceeds are paid directly to the trust beneficiaries and not to the estate. This type of trust also provides income and estate tax advantages.

A Trust Designed to Provide Liquidity for an Estate Without