In the usual case, an unfunded irrevocable life insurance trust will rely on gifts from the trust grantor to provide the funds necessary to pay future premiums. These gifts are subject to the gift tax. IRC § 2503(b) provides for a gift tax annual exclusion of up to $15,000 (as indexed through 2019) per donee per year for gifts of present interests. Gifts of a future interest do not qualify for the annual exclusion. Consequently, gratuitous transfers in trust of cash to pay life insurance premiums would ordinarily be future interest gifts for which no annually excludable amount is available.
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