When you’re going through the estate planning process, you may discover you want to start a trust for your beneficiaries. However, you want to fund it with your life insurance money they will receive after you pass. You’re wondering: Is this even possible?
By learning about life insurance and trusts, you can guarantee that your loved ones will receive what they need when you’re gone and your wishes will be fulfilled.
Funding a Trust Through Life Insurance
A trust can indeed be funded through life insurance. The most popular kind of trust for this purpose is a revocable living trust.
Funding a trust through life insurance can be especially helpful for parents of minor children. They can each purchase term life insurance and make sure that their children will receive the money they need. In the event that the parents pass away, then the designated trustee would be responsible for managing the trust’s assets for the minor children. Term life insurance is tax-free, and it’s simple to sign up for it. A term life policy can last until children are adults; if parents want to ensure the trust has longer funding, they can sign up for guaranteed universal life insurance.
Other Trusts Funded Through Life Insurance
Aside from a revocable living trust, parents can also fund a testamentary trust or a special needs trust through life insurance. The former is created through your will when you pass away, and the latter is for a beneficiary with special needs. Typically, a permanent life insurance policy will be used.
Contacting an Attorney
If you need help funding your trust through life insurance, you can contact the estate planning attorneys at Legacy Law Group in Eastern Washington, Spokane Valley, and Spokane itself. Get in touch with us at (509) 315-8087.