ILITs and Crummey Powers
Keeping life insurance out of the estate: ILIT structure, the three-year rule, transfer-for-value, and Crummey withdrawal mechanics.
What this guide covers
- An ILIT keeps insurance proceeds out of the estate — the insured must hold no incidents of ownership.
- Have the ILIT buy a new policy to avoid the IRC 2035 three-year lookback, and watch the transfer-for-value rule on existing policies.
- Crummey notices make premium gifts annual-exclusion-eligible; document them rigorously.
- Address the 5-and-5 lapse problem with hanging powers or capped contributions.
The full guide includes the detailed analysis, worked examples, statutory citations, and related resources below.
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Educational reference, not legal advice. Prepared for licensed professionals as general reference; not legal advice and no attorney-client relationship is created. Law varies by state and changes over time — verify transfer-tax figures and statutory citations against current primary authority. This resource was last updated 2026-07-31. Estateur is not a law firm.