Legal Blog

The Weekly Scenario: Contributing Assets Other Than Life Insurance to an Irrevocable Life Insurance Trust


Question: Can I contribute an asset other than life insurance to an irrevocable life insurance trust? What if I would like to access the cash value of a life insurance trust?

Answer: Yes, any asset can be placed in the trust. Often, an income-producing asset is placed inside of the trust to provide an income stream from which to pay the premiums on the life insurance policy. This technique reduces (or even eliminates) any further gifts by the Settlor/insured to the trust for the purpose of paying the life insurance premiums.

As a rule, generally, you cannot directly access the cash value of an insurance policy owned by the trust. However, typically the trust instrument allows the Settlor to borrow from the trust (with adequate interest). A trust can also be designated to provide access to the cash value of the life insurance policy for the needs of a spouse or child.



As always, if you have any questions or would like to learn more, please contact Steve Shane at or 301.575.0313.


Steve Shane Casual | 301.575.0313

Steve Shane provides strategic counseling to clients in need of estate administration, charitable giving and business continuity planning while minimizing estate, gift, and generation-skipping transfer tax exposure. He offers legal guidance to clients on asset protection and the proper disposition of assets in accordance with the client’s objectives, while employing tax planning techniques such as the use of irrevocable trusts, life insurance planning, lifetime gifts and charitable trust. He is also experienced with drafting documents for business planning, the incorporation and application for exemption for Private Foundations and the administration of decedents’ estates.





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