Life Insurance Trust

What is a life insurance trust?

A life insurance trust is a type of trust that has the power to purchase any life insurance policy on the grantor who starts the trust, the grantor’s spouse, or the beneficiaries of the trust. A life insurance trust will own the life insurance policy and will collect the death proceeds when the grantor dies. The life insurance trust agreement will classify who the life insurance trust beneficiary is and how it should be paid out. A life insurance trust form is usually put together for estate planning purposes such as a way to provide security for your loved ones after your death and to provide liquidity to your estate so that your debts and other obligations can be taken care of.

What are the benefits to a life insurance trust?

There are a few benefits of a life insurance trust that you will want to consider when deciding if a life insurance trust is best for your family and your loved ones. One benefit of a life insurance trust is that it may provide the necessary cash to pay your estate taxes and any other expenses that you might have after your death. A life insurance trust can reduce the estate taxes by taking away the insurance from your estate. A life insurance trust will give you the most control over your life insurance policy and how those proceeds are used within your estate. Finally, a life insurance trust may provide an income to your spouse without having to worry about any of the insurance proceeds being included in the spouse’s estate.