WHAT OTHER KINDS OF TRUSTS ARE USED IN ESTATE PLANNING?
Trusts serve a wide variety of needs in estate planning; they may be established for the benefit of a child, a disabled or incapacitated individual or a charity. In addition to the popular revocable inter vivos trust (see #7), one other common type of trust is a life insurance trust. The trustee of a life insurance trust holds title to a life insurance policy, and on the death of the insured, receives, manages and distributes the proceeds of the life insurance policy. A life insurance trust allows for the organized management of the-proceeds of a life insurance policy on the death of the insured. In addition, if a life insurance trust is properly created and operated, the proceeds of a life insurance policy held in the trust will not be subject to any federal estate taxes. To avoid federal estate taxes, an insurance trust must be irrevocable; that is, once the trust is signed, it cannot be amended or revoked.
