Life Insurance Quotes

Setting up a trust for a life insurance policy

08/10/11

Many people may be unaware that possessing a life insurance policy on themselves will cause the policy to be included in their taxable estate upon their death. To avoid having life insurance payouts taxed, Business Management Daily recommends establishing a life insurance trust.

Setting up a trust that owns someone's life insurance policy allows the benefits to be kept out of the taxable estate. The death benefits can still be used in all the traditional manners, such as covering funeral arrangement costs, estate taxes, debt that is left behind and providing funds to surviving family members.

The source cautions people to be careful while doing setting up a trust, however, as the trust must be irrevocable in order to be sheltered from estate tax. It isn't possible to change one's mind after setting up a trust, and trusts prevent individuals from serving as trustees on their own policies. Instead, a child, children, bank or advisor is usually named as the trustee, who has complete control over the policy.

In 2010, LIMRA International announced that roughly one third of all American households didn't have any life insurance. Half of the households in the United States admitted to not having adequate life insurance coverage.

Talk to an Advisor

A licensed insurance advisor can explain your options and help you choose the right life insurance for your needs.

Call: 1-800-823-4852

Chat: Live Advisor Chat

Sm

A few of the carriers we quote