“State laws play a crucial role in meeting client objectives when creating an ILIT. As these laws can vary greatly state to state, clients must carefully consider their long-term impact on the ILIT. If a proposed ILIT has a potential legal connection or “nexus”  to multiple states, clients should choose the state for their ILIT deliberately, rather than by default. Several issues will likely affect the client’s decision, including application of state income taxes, whether the state allows perpetual or long-term trusts, the degree of protection provided from creditors, etc. It is important to review the state’s jurisdiction and laws to ensure that the ILIT is properly implemented.”

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