Hi, this is Janet Brewer.
I’m frequently asked if it’s legal to put life insurance policies into the name
of a living trust. While it is “legal” to put your life insurance
policies into a living trust, the question I ask in return is “what are you trying
to accomplish”? Usually, the answer is that my client wants to make sure his or her children
are the beneficiaries. Actually, putting a life insurance policy
into the name of a trust has no effect on who the beneficiaries are … putting the
life insurance into the trust merely makes the trust the owner of them; the only way
to make sure your children are the beneficiaries is to name them as your beneficiaries on the
beneficiary designation form or to name your trust as the beneficiary if you want to make
sure your children have someone else manage the insurance funds for them until they are
a bit older and more mature. There are many ways you can use life insurance
as part of your estate plan. For example, if you’re trying to save estate taxes, you
might want to consider creating an irrevocable life insurance trust (“ILIT”). You might also
create an irrevocable life insurance trust to provide liquidity for your estate.
There are many other ways life insurance can be used in estate planning.
This is Janet Brewer. If you have questions about using life insurance trusts as part
of your estate plan or any other California estate planning questions, please contact
me at www.CalProbate.com