When to Get a Life Insurance Trust
Having the right life insurance is going to make all the difference in the world. People who have life insurance can feel safe and have peace of mind, knowing that they are not going to be leaving a burden on their family when their time comes and they pass away. Everyone should have life insurance, but keep in mind that people's circumstances are different and so one life insurance policy is not going to be right for everyone.
Life Insurance Trust
A life insurance trust is very important to discuss here. A life insurance trust is a trust which is set up for the purpose of owning a life insurance policy. It is an irrevocable, non-amendable trust, and with this trust, upon the death of the person who is insured with it, the trustee will invest the insurance and proceed and administer the trust for the beneficiary.
One of the most popular and effect estate planning and asset protection strategies is to use the life insurance trust, and an important purpose of this trust is to exclude the proceeds of a policy from estate tax.
It is important to realize however that there are certain disadvantages that come from a life insurance trust. For one, there is a certain loss of control that comes when a person gets one of these trusts. If the insured maintains control over the policy here, its benefits will be included in their taxable estate whoever is designated as the beneficiary or nominally deemed as being the owner. Another disadvantage to these trusts is that there is an exposure to gift tax liability.
However there is also the fact that this disadvantage would only come about if children, rather than an insurance trust, owned and controlled the policy.
A proper financial security plan that includes life insurance is really going to add to anyone's life. It will mean the difference between leaving the family with debts and bills to pay and making sure that no one will have to pay anything out of their own pocket. There are many ways for a person to find out more information about this issue if they are interested, namely the Internet.
The Internet is a fantastic resource because it allows people the ability to browse through literally hundreds of different informational websites in a matter of minutes, something that obviously could not be done otherwise. This makes the process of finding out information quicker and easier.
