Creating an estate plan is a comprehensive event that helps to ensure that your loved ones receive the inheritance you intend them to enjoy. For some people, setting up a will is sufficient. Other individuals may decide that they want to do a little more. They may establish trusts to pass assets down.
Trusts are helpful for the beneficiaries because they provide some secrecy. The contents of a trust aren’t public record like the will. There are also other benefits to trusts that the creator might find important. There are different types of trusts available for people who are do their estate planning. One of these is the life insurance trust.
You might think that the life insurance policy doesn’t need to be placed in a trust, but you might change your mind after you find out a few important points:
- A life insurance trust is irrevocable, so it provides some measure of protection from creditor claims.
- The creator can set the terms of the distribution of the life insurance trust, so their wishes will be followed.
- The value of the life insurance policy won’t count toward the estate’s value, which is beneficial for higher value estates that are subject to an estate tax.
There are many things that you should consider when you’re handling the estate planning. Your attorney can help you to evaluate the options so you can devise an estate plan that accurately reflects your wishes. Just remember to review it periodically or when you have major life events happen so you can be sure it still serves your needs as intended.