What is the difference between licensing and registration?

Licensing is permission to perform a regulated activity (like selling insurance or acting in a brokerage capacity). Registration is being listed with a regulator for oversight and a public record. Credentials can be useful, but they are not the same as licensing or registration. If unsure, ask the professional to state their role and the regulator that oversees it.

How can I check if someone is registered as an investment adviser?

Use the SEC’s Investment Adviser Public Disclosure (IAPD) website to search for the person and firm and review their status and filings.

How can I check a broker or brokerage firm’s background?

Use FINRA BrokerCheck to review a broker or firm’s profile, employment history, and disclosures (if any).

What is Form CRS and why should I read it?

Form CRS is a short relationship summary to help consumers understand services, fees, and conflicts, and compare firms. If evaluating investment advice, ask for Form CRS and read it before agreeing to services.

What is Form ADV and what does it tell me?

Form ADV is part of the disclosure system for investment advisers. It describes the adviser’s business, services, conflicts, and other required information. If someone is acting as an investment adviser, ask where you can read their Form ADV.

What does a disclosure mean in BrokerCheck or IAPD?

A disclosure is reportable history (for example, regulatory actions or customer disputes) depending on the role. It is not automatically disqualifying, but it is a signal to read carefully, understand severity and timing, and look for patterns.

Is financial advisor a regulated title?

“Financial advisor” is often a general marketing title. What matters is the person’s actual role (insurance agent, broker, investment adviser representative, or multiple). Ask what they are licensed or registered to do and which regulator oversees those activities.

What does fiduciary mean, and when does it apply?

“Fiduciary” generally refers to a duty to act in a client’s best interest within the scope of the relationship. Whether and when it applies depends on the role and engagement. Ask for the standard of care that applies to your relationship and the specific recommendation, in writing if possible.

What are red flags that should make me slow down?

Common pause-and-verify red flags include pressure to act quickly, refusal to provide key documents, guarantees implied where outcomes depend on assumptions, and replacing something you own without a written side-by-side comparison and rationale.

If I’m considering replacing a policy, what should I request?

Request a side-by-side comparison of the old and new policy, a written rationale, any surrender charges or penalties, and any new underwriting requirements or time-based limitations. Then take time to review before signing.

Irrevocable Life Insurance Trusts in Houston, TX

An irrevocable life insurance trust (ILIT) can own a life insurance policy instead of you owning it personally, which can help align ownership and control with a broader estate plan. This Houston consumer guide explains where ILITs commonly fit, how trustees and administration affect real-world outcomes, what paperwork and timelines typically come up, and what to ask your attorney and tax team before moving forward.

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An irrevocable life insurance trust, often called an ILIT, is a trust that can own a life insurance policy instead of you owning it personally. “Irrevocable” is the key word. In most cases, once it’s signed and funded, it’s meant to run by the rules written into the trust, not be casually edited later.

People typically consider an ILIT when they want policy ownership to align with an estate plan. It can create cleaner lines around who controls the policy, who ultimately benefits, and how the proceeds are handled after a death.

In Houston and Greater Houston, ILIT conversations usually involve coordinated review with Texas legal counsel and a tax professional. The documents matter, and so does the administrative follow-through once the trust exists.

This Consumer Guide explains the basics, where ILITs commonly fit, and what to ask before moving forward.

Educational information only.
Not legal, tax, or individualized financial advice.

ILIT Basics for Houston, TX Households

At a high level, an ILIT is a trust that can own a life insurance policy and spell out how the death benefit should be managed and distributed. The trust becomes the policy owner. That separation matters because it can:

clarify who has authority to make changes to the policy
define how and when beneficiaries receive proceeds
support coordination with a broader estate plan, especially when planning is more complex

Just as important, an ILIT is not a DIY template, and it’s not a shortcut around legal or tax rules. It’s a legal structure with ongoing administrative requirements. If an ILIT is appropriate, it’s typically drafted by an estate planning attorney and coordinated with a tax professional so the ownership, funding, and documentation line up.

You most often see ILITs discussed in connection with:

larger life insurance policies
estate planning and legacy planning
family or business planning where control and clarity matter

Trust

A legal arrangement that holds assets under written terms

Beneficiary

The person(s) who may receive trust benefits

Trustee

The person or institution that administers the trust

Crummey notice

A notice sometimes used when gifts fund premiums

Grantor/Settlor

The person who creates the trust

Why Houston Families Look at ILITs

Most Houston households don’t go shopping for an ILIT. It usually comes up once a bigger question is on the table, like “Who should control this policy?” or “How do we make sure the benefit is handled the way we intend?”

Here are a few common situations where an ILIT is discussed in planning:

Estate plan coordination and timing control: aligning life insurance ownership with the broader plan, and setting clearer terms around when proceeds can be distributed.
Minor beneficiaries or beneficiaries who need guardrails: adding structure so funds are managed responsibly instead of landing outright with a beneficiary who is not ready.
Blended family clarity: creating consistent beneficiary terms when there are multiple households, competing priorities, or long-term planning concerns.
Business continuity planning: supporting buy-sell or key-person planning where ownership, control, and distribution rules need to match the underlying agreement.

Whether an ILIT is a fit depends on the facts, the policy purpose, and how the trust would interact with the rest of the estate plan. That’s why ILIT decisions are typically guided by an estate planning attorney and reviewed with tax professionals.

Roles, Control, and Day-to-Day Administration

Ownership Structure and Control Basics

An ILIT is typically set up so the trust owns the policy, and the trust receives the death benefit under the trust’s written terms. That is very different from individual ownership. In plain language: the person who owns the policy usually controls what can be changed. With an ILIT, the trustee is the one operating within the trust rules, which can affect things like:

Who can update beneficiaries
Who can approve policy changes that the contract allows
How decisions are documented and carried out

The big idea is separation: the insured is not the one “driving” the policy.

Trustee Duties That Drive Real-World Results

In practice, the trustee role is where ILITs succeed or get messy. A trustee is often responsible for:

Premium handling: making sure payments are made the right way, on time
Recordkeeping: tracking contributions and maintaining clean files
Required notices and paperwork: following the trust’s process when gifts fund premiums
Distribution follow-through: applying the trust terms when proceeds are paid

A practical rule of thumb: choose a trustee who can actually manage the admin work consistently, not just someone who sounds good on paper.

How an ILIT Is Commonly Implemented

Most ILITs come together through a coordinated, step-by-step process. The details vary, but the workflow usually looks like this:

An estate planning attorney drafts the trust and confirms the intent, trustee provisions, and distribution terms.
The trustee accepts the role and sets up the practical logistics (for example, opening an account if the trust will receive funds and pay premiums).
The policy ownership is handled correctly, either by applying for a new policy with the trust as owner, or by evaluating whether an existing policy should be moved into the trust.
The trust terms and beneficiary language are reviewed together so the policy and the estate plan are aligned, not working at cross purposes.
A documented premium funding process is established so contributions, payments, and records stay clean over time.

In most Houston ILIT conversations, more than one professional is involved. It is common to coordinate between an estate planning attorney, a CPA, and the insurance professional, with each staying in their lane.

New Policy vs Moving an Existing Policy Into an ILIT

A new policy can be simpler because the ownership and beneficiary structure can be set correctly from the beginning. Moving an existing policy into an ILIT may still be possible, but it often raises extra questions around timing, paperwork, and tax planning. If a transfer is being considered, it’s usually something to review with an attorney and CPA before signing anything so you understand what changes, what needs to be documented, and what follow-through is required.

Paperwork and Timelines You May See in Planning

ILIT planning is not one document and done. Even in straightforward cases, there are usually multiple forms, review steps, and signatures involved. The goal is to get the structure right upfront, then make sure the paperwork stays consistent across the trust, the policy, and the funding method.

Here are the common categories of documents Houston households often run into:

Trust documents and trustee acceptance
The trust itself, plus paperwork showing the trustee has accepted the role and understands the administrative responsibilities.
Policy application and ownership or beneficiary forms
The application, ownership setup, and beneficiary language all need to match the ILIT structure.
Premium funding documentation and recordkeeping
A clean paper trail for how premiums are funded, how gifts are tracked, and what the trustee should retain for records.
Existing coverage summaries
If there is other insurance in place, summaries or in-force details may be reviewed for coordination or replacement analysis.

Timeline-wise, it often moves in phases: drafting and review, underwriting, ownership and beneficiary setup, then a final cross-check before anything is implemented. The exact pace depends on complexity, responsiveness, and what the insurer requests.

Topics to Raise With Your Attorney and Tax Team

If you are considering an ILIT, your best next step is usually a focused conversation with your estate planning attorney and, when appropriate, your CPA. You are not trying to “check boxes” here. You are trying to understand what you are committing to and how the structure holds up over time.

Here are practical topics Houston households often raise in that review:

Trustee selection and a successor plan: Who can actually handle the work, and who steps in if the trustee cannot serve later?
Beneficiary terms and distribution controls: When and how beneficiaries receive funds, and what guardrails exist if circumstances change.
How premium gifts are documented and tracked: What records need to be kept and who is responsible for maintaining them.
Administrative expectations: Notices, recordkeeping, approvals, and any recurring tasks the trustee must follow.
How changes are handled later: What can be updated, what is difficult to change, and what triggers a formal amendment process if one is even available.
Fit with the broader estate plan: How the ILIT coordinates with wills, other trusts, business interests, and beneficiary designations across accounts.

Use these as conversation starters. A well-built plan should reflect your specific facts, not a generic template.

Common Missteps and Caution Signals

Most ILIT problems are not “bad intent” problems. They are follow-through problems. An ILIT can be a solid planning tool, but it only works as well as the paperwork and administration behind it.

Common missteps to watch for:

Treating administration like a formality: The trust may require ongoing steps. If no one is actually doing them, the structure can get messy fast.

Paying premiums without clear documentation: Premium funding should be tracked and supported with the right records so the story is consistent later.

Letting beneficiaries or trustee provisions go stale: Life changes. If the trust language or successor trustee plan is outdated, it can create delays and disputes.

Assuming it can be easily changed later: “Irrevocable” is not a label to ignore. Updates may be limited, time-consuming, or require legal review.

None of this is meant to be alarming. It is simply a reminder that details and consistency matter with this kind of structure.

Quick ILIT Checklist for Houston, TX Residents

Use this checklist as a quick reality check before you move forward or sign anything:

Confirm ownership and beneficiary setup. If the ILIT is supposed to own the policy and receive the death benefit, verify the policy owner and beneficiary fields match that intent.
Get clear on trustee responsibilities. Ask who will handle premium payments, notices, approvals, and distributions, and make sure the trustee is comfortable doing the work.
Confirm a record-keeping plan exists. Simple question: where will documents live, and who is responsible for keeping them current?
Double-check beneficiaries and contingents. Make sure the trust terms and beneficiary language align with the rest of the estate plan, including any contingencies.
Ask how premium gifts are documented. Clarify what gets tracked, what gets retained, and who keeps the proof.
Know what triggers attorney involvement later. Ask what kinds of changes or life events typically require a legal review, and confirm the successor trustee plan for continuity.