Get help from step one setting up your Life Insurance Trust!
Who needs a Life Insurance Trust?
There are many things to consider when deciding to purchase life insurance; which type of policy to choose, which insurance provider is best, who the beneficiaries will be and, perhaps, whether or not a life insurance trust is necessary or right for you and your coverage needs.
A person creates a life insurance trust when they designate a trustee (often otherwise known as their executors) to hold investments or property for their chosen beneficiaries. The trust is essentially made active when the trust owner dies and the property they place in the trust can include proceeds from a life insurance policy. Oftentimes, people will choose their spouse, their children and/or grandchildren as the recipients or beneficiaries of the trust.
The reason some people choose a life insurance trust is that they can help to streamline certain processes after a person dies and decrease the chances of certain complications. So, for instance, a person may choose to create a life insurance trust to provide financial security for their spouse following their death, to ensure that their property is designated as per their wishes, for tax deferral purposes and/or to help control assets. The types of complications that such a life insurance trust can help to avoid are protecting the property from creditors and avoiding probate or a challenge under the Wills Act.
With regards to your life insurance proceeds, if a life insurance trust exists, the money will go straight to the trust upon the death of the policy holder. All parameters of the trust are upheld through the owner’s will as well as through their life insurance trust agreement.
If you think a life insurance trust may be of interest to you, learn more about it from a licensed insurance agent. Decide whether or not this is a move that’s right for you and your situation and get all of your questions answered.