Life Insurance Trusts
A life insurance trust is an estate planning device that allows you to create an irrevocable trust with the main purpose being for the trust to own life insurance on your life. The trust is irrevocable and its terms cannot be changed once it is established. Because you are not the owner of the policy, when you die, the proceeds from the life insurance do not count in your taxable estate and can be distributed to your loved ones without taxes being owed.
Since the proceeds from the policy replace the money that would be paid from your estate for estate taxes, this trust is sometimes referred to as a wealth replacement trust. The trust has administrative requirements during your lifetime and a trustee must be appointed to handle the premium payments. The hassle of those requirements are often outweighed by the tax savings.
An estate planning and probate attorney at Bagwell Holt Smith P.A. can assist you with your life insurance trust. Schedule a consultation today.