Deposit Check into ILIT Account

[oit...@gmail.com]

I have a question regarding depositing a check into my ILIT checking account to pay the insurance premiums for the policies in the ILIT. For years, I (the Grantor) have mailed a check to my son, he's a trustee, made out to "ABC, trustee XYZ Irrevocable Trust, dtd DD/MM/YY" and he would endorse it and deposit it at the Bank of America branch near his home. Then he would notify his brother (also a trustee) of the deposit and they would exchange Crummey letters.

Now, there is a Bank of America branch close to my home. Instead of mailing my son the check, can I simply make out the check to myself and deposit it in the ILIT account at this local branch? Then I could notify my kids of the deposit and they could exchange their Crummey letters as usual.

So, is the Grantor allowed to deposit the check directly? if so, would I make the check payable to "Ron" or to "Ron, grantor XYZ Irrevocable Trust, dtd DD/MM/YY"?..TIA, Ron

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[Stuart O. Bronstein]

"oit...@yahoo.com" <oit...@gmail.com> wrote:

> I have a question regarding depositing a check into my ILIT
> checking account to pay the insurance premiums for the policies in
> the ILIT. For years, I (the Grantor) have mailed a check to my
> son, he's a trustee, made out to "ABC, trustee XYZ Irrevocable
> Trust, dtd DD/MM/YY" and he would endorse it and deposit it at the
> Bank of America branch near his home. Then he would notify his
> brother (also a trustee) of the deposit and they would exchange
> Crummey letters.
>
> Now, there is a Bank of America branch close to my home. Instead
> of mailing my son the check, can I simply make out the check to
> myself and deposit it in the ILIT account at this local branch?
> Then I could notify my kids of the deposit and they could exchange
> their Crummey letters as usual.
>
> So, is the Grantor allowed to deposit the check directly? if so,
> would I make the check payable to "Ron" or to "Ron, grantor XYZ
> Irrevocable Trust, dtd DD/MM/YY"?..TIA, Ron

The payment has to be considered a gift. The major restriction is
that you can't pay the insurance premium yourself. But if you
deposit it into the same account your son would, and you immediately
let him know that you made the gift, you should be OK.

--
Stu
http://DownToEarthLawyer.com

[John Levine]

According to oit...@yahoo.com <oit...@gmail.com>:

>Now, there is a Bank of America branch close to my home. Instead of mailing my son the check, can I simply make out the check to myself and
>deposit it in the ILIT account at this local branch? Then I could notify my kids of the deposit and they could exchange their Crummey letters as usual.

If the ILIT has an account and the check is a gift to the ILIT, why
wouldn't you just make the check out to the ILIT? If the check is
written to the ILIT and the account it's deposited into is in the name
of the ILIT, the bank isn't going to care who physically hands them
the check.

--
Regards,
John Levine, jo...@taugh.com, Primary Perpetrator of "The Internet for Dummies",
Please consider the environment before reading this e-mail. https://jl.ly

[Stuart O. Bronstein]

"John Levine" <jo...@taugh.com> wrote:

> According to oit...@yahoo.com <oit...@gmail.com>:
>>Now, there is a Bank of America branch close to my home. Instead
>>of mailing my son the check, can I simply make out the check to
>>myself and deposit it in the ILIT account at this local branch?
>>Then I could notify my kids of the deposit and they could exchange
>>their Crummey letters as usual.
>
> If the ILIT has an account and the check is a gift to the ILIT,
> why wouldn't you just make the check out to the ILIT?

Technically it's supposed to be made out to the name of the trustee,
as trustee for the ILIT. But that's a minor issue.

> If the check
> is written to the ILIT and the account it's deposited into is in
> the name of the ILIT, the bank isn't going to care who physically
> hands them the check.

You're right. Though it's not about the bank, but making sure the
payment is actually a gift to the ILIT (or the beneficiaries of the
ILIT). And then the beneficiaries have to be notified of the gift
and be given a reasonable period of time (normally 30 days) to
withdraw the money, before it can be used to pay the insurance
premium. If any of that is disrupted, the benefit of the ILIT may
fail.


--
Stu
http://DownToEarthLawyer.com

[oit...@gmail.com]

Thanks guys, Stuart's comment, "Technically it's supposed to be made out to the name of the trustee, as trustee for the ILIT" tells me I should just keep doing it the way I've been doing it. Thanks again...Ron