Keywords: Illinois Irrevocable Life Insurance Trust, Beneficiaries, Crummy Right of Withdrawal, Types Illinois Irrevocable Life Insurance Trust — Beneficiaries HavCrummyey Right of Withdrawal: An Illinois Irrevocable Life Insurance Trust (IIT) is a legal arrangement used to protect life insurance proceeds from being included in the insured's taxable estate. By creating an IIT, the policyholder transfers ownership of the life insurance policy to the trust, removing it from their taxable estate. One significant feature of an IIT in Illinois is the inclusion of the Crummy right of withdrawal. The Crummy power allows beneficiaries of the trust to withdraw a limited portion of contributions made to the trust within a specific timeframe, usually 30 days. This withdrawal right is named after a court case (Crummy v. Commissioner) that established the legality of such provisions. The Crummy right of withdrawal is important as it helps ensure that the IIT qualifies for the annual gift tax exclusion. Under the current tax law, any contributions made to an IIT below the annual gift tax exclusion limit (which is $15,000 in 2021) are not subject to gift taxes. However, by providing the beneficiaries with the right to withdraw the contributions for a limited time, the IIT can meet the requirements for the exclusion. There are various types of Illinois Irrevocable Life Insurance Trusts that can have the Crummy right of withdrawal: 1. IIT with a Testamentary Crummy Power: This type of IIT is established by a will and comes into effect upon the policyholder's death. The beneficiaries are then notified of their withdrawal rights, and the trustee ensures the contributions meet the qualification criteria. 2. IIT with a Lifetime Crummy Power: In this type of IIT, contributions are made during the policyholder's lifetime. The beneficiaries are notified of their right to withdraw and given the designated withdrawal window. 3. IIT with a Spousal Access Trust (SAT) Crummy Power: This IIT variation includes additional provisions that allow the surviving spouse to access trust assets for specific purposes while maintaining the Crummy right of withdrawal for beneficiaries. It provides more flexibility in managing the trust assets. In conclusion, an Illinois Irrevocable Life Insurance Trust with beneficiaries having the Crummy right of withdrawal is a useful tool in estate planning, allowing policyholders to protect life insurance proceeds from estate taxes. Whether established through a will or during the policyholder's lifetime, such trusts provide the added benefit of potential tax savings for both the policyholder and beneficiaries.