Frequently Asked Questions
ILIT Crummey Notice FAQ
Common questions about Crummey notice administration and how BAS supports it.
What BAS's Crummey notice service covers
- Documenting each year's contribution to the trust.
- Preparing Crummey Notices for the trust's beneficiaries.
- Coordinating delivery of notices to beneficiaries.
- Maintaining proof of delivery for each notice sent.
- Keeping annual administrative records organized and accessible.
This FAQ offers general, educational information about Crummey notice administration and BAS’s role, not legal, fiduciary, or tax advice. It does not address any specific trust. Barth Agency Services does not act as Trustee. The Trustee is responsible for all legal, fiduciary, and tax decisions related to the trust, in consultation with the Trustee’s attorney and tax advisor.
ILIT & Crummey Notice Basics
An Irrevocable Life Insurance Trust — a trust that owns a life insurance policy, typically funded each year through cash contributions used to pay the policy's premiums.
It's the written notice that informs a trust beneficiary of their right to withdraw their share of that year's contribution, for a limited window of time. Giving beneficiaries this genuine withdrawal right is generally what allows the contribution to qualify as a present-interest gift for annual gift tax exclusion purposes — the notice is the documented evidence that the right was actually offered.
Annual ILIT contributions require timely Crummey notices to beneficiaries — notices are tied to that year's specific contribution and are expected to go out promptly afterward, giving beneficiaries a real opportunity to exercise (or not exercise) their withdrawal right within the window before it lapses.
What's Included
A clear record of each year's contribution to the trust — the amount, the date it was made, and its source — which becomes the basis for that year's Crummey notices.
A notice is drafted for each beneficiary entitled to a withdrawal right, reflecting the specifics of that year's contribution and the withdrawal window that applies.
Notices are sent to beneficiaries promptly after the contribution, using a consistent, trackable delivery method so there's a clear record of when each notice went out.
Evidence that a notice actually reached its beneficiary — for example, a signed acknowledgment or a delivery confirmation — kept on file alongside the notice itself.
An organized file for each year documenting that year's contribution, the notices prepared, and proof of their delivery. Keeping this file current year over year builds a complete administrative history for the trust, ready to hand to the Trustee's advisors if ever needed.
Why It Matters
A missed, late, or undocumented notice can call into question whether a beneficiary's withdrawal right was genuine for that year's contribution — which is central to the gift tax treatment the contribution is relying on. Specific consequences depend on the trust and the facts, which is a question for the Trustee's attorney and tax advisor.
If an ILIT's administration is ever reviewed, a complete record — contribution, notice, and proof of delivery, year after year — is what supports the position that withdrawal rights were genuinely offered, rather than relying on the trust document alone.
Working With BAS
BAS provides administrative support: documenting annual contributions, preparing Crummey Notices, coordinating their delivery, maintaining proof of delivery, and keeping annual administrative records organized.
No. BAS is administrative support only. BAS does not act as Trustee and does not make legal, fiduciary, or tax decisions for the trust.
Legal, fiduciary, and tax decisions remain the responsibility of the Trustee and the Trustee's advisors. BAS carries out the administrative work of Crummey notice compliance under the Trustee's direction.
Reach out and we'll go over the trust's current administrative process, identify what's already in place, and set up a consistent process for handling this year's — and every future year's — contribution, notices, and recordkeeping.
Ready to put your ILIT's annual notices on a reliable process?
Barth Agency Services, Inc. provides administrative support for annual Crummey notice preparation, delivery, and recordkeeping — under the Trustee’s direction.