Video Summary
What is a Life Insurance Trust? A Life Insurance Trust usually means it’s an irrevocable trust when a life insurance policy is purchased by the person who’s doing their estate planning. My experience, they’ve been primarily used whenever you have a taxable estate and you wish to get a life insurance policy in order to be able to pay the estate taxes so that all the assets would pass through to the beneficiaries. The Life Insurance Trust is an irrevocable trust and that way by having the insurance policy not held in your name when you die, is not included in your estate for tax purposes. And the trustee then distributes them, uses the money pursuant to the provisions of the trust document to pay the taxes and also to pay the money out to the beneficiaries. But you have no control over the irrevocable life insurance trust after you purchase the policy. Of course, there’s an exception if you’re doing a term policy and you make the payments every month or every year. And so if you want to terminate the trust, well you quit making the term life insurance premiums and there’s nothing in the trust. There are some tax estate tax question or inclusion depending on when the life insurance policy is taken out and how much it is and what you need to do to avoid that. So if you have any questions, give me a call at (727) 847-2288.