How does a life insurance trust work?
A life insurance trust is used to remove the assets and death benefit of the life insurance policy out of the insured’s estate for estate tax purposes. If the insured were to remain the owner of the policy, the policy procedes would be estate taxable at the time of death. This is a non-issue if your assets are less the the allowable estate tax limits.
Related Questions
- Why is it better to have an irrevocable life insurance trust purchase alife insurance policy on the donor, rather than have the heirs themselves own a permanent life insurance policy with the premium paid by the heirs with gifts by the now- living donor?
- Can I add a new life insurance policy to an existing ILIT (Irrevocable Life Insurance Trust)?
- Can I put a life insurance policy that includes critical illness cover, in trust?
