Life Insurance and the Three Year Rule

Under the so-called three year rule, if an insured person transfers an insurance policy to an irrevocable life insurance trust, even though the insured may no longer retain any incidents of ownership, if he dies within the three year period following the transfer, the entire policy proceeds will be includable in the insured’s gross estate, effectively defeating the major objective of the irrevocable trust plan.

Learn how to avoid the three year rule problem when a new life insurance policy is involved and how to properly plan for mitigation of potential three year rule impact when an existing policy is to be transferred. See Article.

Attorney Adler focuses his practice on estate planning, wills, trusts and estates. He can be reached at 212-843-4059 or 646-946-8327.