Life Insurance Trust (ILIT) Calculator

No — an ILIT only produces real estate tax savings for estates that would otherwise exceed the federal estate tax exemption, which is $15,000,000 per individual in 2026 under IRS Rev. Proc. 2025-32 (roughly double that for a married couple using portability). For an estate comfortably below that threshold, the ILIT's ongoing trustee fees and administrative complexity may not be justified since no federal estate tax would be owed either way.

The policy has to be owned by the trust rather than the insured for the death benefit to be excluded from the insured's taxable estate — if the insured could revoke the trust and reclaim the policy, the IRS would still treat it as part of the estate. This is also why an existing policy transferred into an ILIT is generally still included in the estate if the insured dies within three years of the transfer (the IRS's three-year lookback rule), which is why ILITs are commonly funded with a brand-new policy purchased directly by the trust instead.

Premiums paid into an ILIT are structured as gifts to the trust's beneficiaries, and as long as each beneficiary's share stays within the annual gift tax exclusion ($19,000 per beneficiary in 2026) and the trust grants beneficiaries a brief window to withdraw the gift (Crummey withdrawal rights), the gifts qualify as present-interest gifts that don't use up any of the donor's lifetime exemption. With multiple beneficiaries, this can shelter a fairly large annual premium entirely within the exclusion.

Total ILIT Cost in this calculator combines the ongoing insurance premiums with Trustee Annual Fee — the cost of a trustee (often a bank, attorney, or professional fiduciary) managing the trust, filing any required tax returns, and administering Crummey withdrawal notices each year. These administrative costs are a real, recurring expense on top of the premium itself, which is why Net Savings subtracts both from the projected estate tax savings rather than comparing tax savings to premiums alone.

Not directly — Estate Tax Saved and Net Savings are driven by Death Benefit and Estate Tax Rate, not by how many beneficiaries split the proceeds. Number of Beneficiaries only affects Per Beneficiary, which simply divides the total Death Benefit evenly to show what each beneficiary would receive; it also matters in practice for how much premium can be gifted tax-free each year, since more beneficiaries each holding a Crummey withdrawal right can absorb a larger combined annual gift within the exclusion.