Maryland Irrevocable Life Insurance Trust — Beneficiaries HavCrummyey Right of Withdrawal: A Detailed Description In Maryland, an Irrevocable Life Insurance Trust (IIT) with the Crummy Right of Withdrawal provides estate planning benefits and flexibility in managing life insurance policies. This legal arrangement offers individuals the ability to pass on life insurance proceeds to their chosen beneficiaries in a tax-efficient manner. The primary feature of this type of trust is the inclusion of the Crummy Right of Withdrawal, named after a court case involving the Crummy family. This right allows beneficiaries to withdraw funds contributed to the trust for a limited period, typically 30 days, after which the funds become permanently inaccessible. By granting beneficiaries this temporary withdrawal right, the trust obtains the designation of "present interest" for gift tax purposes, making it eligible for annual exclusion from the gift tax. By utilizing a Maryland Irrevocable Life Insurance Trust with the Crummy Right of Withdrawal, individuals can accomplish several goals: 1. Estate Tax Reduction: Placing life insurance policies inside an IIT ensures that the proceeds are not subject to estate taxes upon the policyholder's death. This protects the value of the policy and prevents its inclusion in the taxable estate. 2. Financial Flexibility: The Crummy Right of Withdrawal allows beneficiaries to access funds within the IIT during the withdrawal period. This can be highly advantageous in situations where beneficiaries may face financial setbacks or require immediate access to funds, providing a safety net when needed. 3. Tax Efficiency: When contributions are made to the trust, beneficiaries have the option to exercise their Crummy Right of Withdrawal within the allotted time. If they choose not to exercise this right, the contributions remain in the IIT, growing tax-free. This allows for the accumulation of wealth within the trust that will eventually pass to the beneficiaries tax-free. While the concept of the Maryland Irrevocable Life Insurance Trust with the Crummy Right of Withdrawal is standard, there may be variations or subtypes distinguished by specific features or purposes. Some of these variations include: 1. Generation-Skipping Trusts: These trusts are designed to pass wealth directly to grandchildren or subsequent generations, bypassing immediate children, thereby avoiding estate taxes in successive generations. 2. Survivorship Life Insurance Trusts: These trusts are established using survivorship life insurance policies, also known as second-to-die policies. The trusts pay out the death benefit after the second insured individual in the policy passes away, providing estate liquidity when it is needed most. 3. Special Needs Trusts: These trusts cater to individuals with disabilities and incorporate specific provisions to maintain eligibility for government benefits while providing supplemental support and care. In summary, the Maryland Irrevocable Life Insurance Trust with the Crummy Right of Withdrawal is a powerful estate planning tool that allows individuals to preserve wealth, minimize estate taxes, and provide financial flexibility to beneficiaries. Understanding the different variations of this trust structure empowers individuals to tailor their estate plan to meet their unique needs for wealth transfer and asset protection.