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Estate & Trusts calculator

Irrevocable Life Insurance Trust (ILIT) Calculator

Can yearly gifts cover the premium, and how could ownership affect estate tax?

See whether yearly gifts may cover the premium and how ownership may affect estate tax.

How to use it

Start with the numbers you know.

Estimates are okay. Nothing is submitted when you calculate.

What this calculator estimates

See whether yearly gifts may cover the premium and how ownership may affect estate tax.

Question-mark icons explain less-obvious terms. Hover, focus, or tap them for plain-English help.
Estate
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Policy
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$
Yearly gifts
people
Simple estimate
years
%
Policy transfer
years

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Start with the decision

Can yearly gifts cover the premium, and how could ownership affect estate tax?

An ILIT can own life insurance intended to provide liquidity or a separate inheritance outside the insured’s estate when ownership and administration are handled correctly. The design is not simply a death-benefit calculation: premium gifts, withdrawal rights, incidents of ownership, trustee control, and transfer timing all matter.

Before you act on the number

See what the result means—and what could change it.

01

How to read it

  • The liquidity gap is a planning target, not a recommended insurance face amount.
  • Annual-exclusion capacity depends on present-interest qualification and actual administration; multiplying beneficiaries by the exclusion is only a screen.
  • Transferring an existing policy can raise the three-year estate-inclusion rule, while a properly established trust purchasing a new policy has different considerations.
02

What could change the answer

  • Insurance illustrations, underwriting, premium financing, carrier strength, or policy selection
  • Exact Crummey-notice procedure, trustee powers, trust drafting, or beneficiary rights
  • Transfer-for-value, split-dollar, private financing, generation-skipping, or state premium-tax issues
  • A legal conclusion that policy proceeds will be excluded from the insured’s gross estate
03

What to take forward

Use the result to identify which assumption needs verification, then bring that question to the professional helping you make the decision.

Transparent method

How the estimate works

See how the estimate is calculated

Estimate estate liquidity needs from the entered tax, debt, expense, business, and family-equalization obligations.

Compare the modeled insurance proceeds with existing liquid assets to identify a remaining surplus or shortfall.

Screen annual premium gifts against the current annual gift-tax exclusion and the number of beneficiaries assumed to hold valid withdrawal rights.

Common questions

Frequently asked questions

What does an ILIT do?

An ILIT is an irrevocable trust designed to own and control life insurance for specified beneficiaries. When structured and administered properly, proceeds may provide liquidity without being owned by the insured’s estate.

What is the three-year rule for an ILIT?

If an insured transfers an existing policy and dies within three years, the proceeds can be brought back into the insured’s gross estate. New trust-owned policies and policy transfers require different analysis.

What are Crummey withdrawal powers?

They are temporary beneficiary withdrawal rights often used to help premium gifts qualify as present-interest gifts for the annual exclusion. Notices and administration must be real, timely, and consistent with the trust.

Can the insured control a policy owned by an ILIT?

Retaining incidents of ownership can undermine estate-tax objectives. Trustee selection, policy rights, premium funding, and communications should be designed with estate counsel.

Sources

Rules and references behind this calculator

See every published value

Want the fine print? See sources, methods, and limits.

Keep going

View every planning tool
High-Net-Worth Life Insurance Needs CalculatorHow much money may the family or business need if the insured person dies?Estate Liquidity and Heir Equalization CalculatorIs there enough cash to settle the estate and treat several heirs as intended?2026 Federal Estate Tax CalculatorCould this estate owe federal estate tax, and is there enough cash to pay it?