Revocable | Irrevocable | Life Insurance Trust Life Insurance Trust: USE - Asset Protection Estate Tax Planning Many people believe life insurance proceeds are exempt from Federal Estate Taxes. In fact, if your client is the insured and possesses any "incidents of ownership" over a life insurance policy, the death benefit from that policy will be included in the client's gross estate for Federal Estate Tax purposes. Imagine the shock to the client's family of having to pay Federal Estate Taxes on a death benefit from a life insurance policy. The purpose of the Insurance Trust is to make sure that the death benefit proceeds from life insurance policies are not included in the client's gross estate for Federal Estate Tax purposes. In addition, the Insurance Trust makes sure that the cash value of life policies and its death proceeds are out of the reach of creditors. Click here to view flow chart.