If you transfer a life insurance policy on your life that you already own to a third party, such as an ILIT, you must survive for at least three years after the transfer date in order for the insurance proceeds to be estate-tax free; otherwise, the insurance will be treated as if you had never parted with it. On the other hand, if someone other than you is the initial purchaser of the insurance policy, the three-year rule does not apply. Therefore, if you are planning to purchase a new insurance policy on your life and you want that policy to be owned by another person (such as an ILIT), that person should acquire the policy from its inception. For example, if you use an ILIT to own insurance on your life, you can avoid the three-year rule if you establish the ILIT before you acquire the policy, and then let the ILIT actually purchase the insurance policy on your life as the original owner.