- This provides a practical and detailed overview of Irrevocable Life Insurance Trusts (ILITs) and their critical role in estate planning. The session breaks down the structure, purpose, and tax advantages of ILITs, with a strong focus on administration best practices. ILITs are used to keep life insurance proceeds outside the taxable estate, providing liquidity for estate expenses or inheritance.
- A central component, Crummey notices allow contributions to qualify for the gift tax annual exclusion.
- Timing and content of Crummey letters
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- Delivery methods
- Drafting techniques to ensure IRS compliance
- Funding the ILIT:
Best practices for transferring life insurance policies into the trust, including:- Proper ownership and beneficiary designations
- Handling the three-year rule (IRC §2035)
- Avoiding inadvertent inclusion in the estate
- Common Pitfalls:
Covers frequent ILIT errors such as:
- Failing to send timely Crummey notices
- Improper policy transfers
- Trustee missteps and mismanagement