ACTEC Trust & Estate Talk A Trustee's Perspective on Trust-Owned Life Insurance
Nov 12, 2025
Join Andrea Chimakas, a fiduciary counsel fellow and trustee practitioner from Charlotte, as she dives into the intricacies of managing Irrevocable Life Insurance Trusts (ILITs). She unpacks the differences between grantor and non-grantor classifications and emphasizes the importance of Crummey withdrawal rights for tax efficiency. Andrea also discusses how to value life insurance policies as trust assets, the duty of diversification for trustees, and the complexities in detecting triggering gifts. Her insights provide a roadmap for effective trust management.
AI Snips
Chapters
Transcript
Episode notes
Choose Grantor Status Up Front
- Decide whether an ILIT will be a grantor or non-grantor trust before drafting the trust.
- Consider income tax treatment, premium payments, and transfer tax implications when choosing classification.
Draft Crummey Rights Precisely
- Draft Crummey withdrawal rights carefully, including who is in the beneficiary class.
- Specify tiers and how trustees learn about other gifts to correctly determine withdrawal triggers.
The Complexity Of Hanging Withdrawal Rights
- Hanging withdrawal rights create an annual 'hang' that can carry forward and compound until exhausted.
- The hang depends on the lesser of $5,000 or 5% of trust value and requires yearly calculation and tracking.