Irrevocable Life Insurance Trust (ILIT) Calculator
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Disclaimer: This calculator provides estimates for informational purposes only and does not constitute legal, tax, or financial advice. Estate planning involves complex laws and regulations. Please consult a qualified attorney or tax professional for personalized guidance.
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Frequently Asked Questions
What is an Irrevocable Life Insurance Trust (ILIT)?
An ILIT is a type of trust that holds a life insurance policy to remove the policy’s death benefit from the insured’s taxable estate, potentially reducing estate taxes and providing asset protection.
How does an ILIT reduce estate taxes?
By transferring ownership of a life insurance policy to an ILIT, the death benefit is excluded from the insured’s estate, potentially reducing estate tax liability.
What are Crummey Letters?
Crummey Letters are notices sent to trust beneficiaries informing them of their right to withdraw gifted funds for a limited time, allowing gifts to qualify for the annual gift tax exclusion.
What is the Three-Year Rule?
If the insured transfers an existing life insurance policy to an ILIT and dies within three years, the policy’s death benefit may be included in the taxable estate.