In irrevocable life insurance trust, also known by the acronym “ILIT” is a vitally important estate, financial planning, and asset protection tool for many people. It is probably one of the most important and under utilized documents. It is a trust, a legal agreement, which is intended to own insurance on your life. When properly done an insurance trust can keep assets out of your taxable estate. It can protect insurance cash values and death proceeds for divorce, lawsuits, malpractice claims and creditors. An ILIT can even provide state income tax savings if the trust can be based in a state that has more favorable income tax rules.