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Life Insurance Trusts

Prepare Yours with Our Torrance Life Insurance Lawyers

If you own a life insurance policy, both your assets and your loved ones can benefit greatly from a life insurance trust. This trust is the best way to transfer funds from your life insurance policy to your children and avoid getting heavily taxed in the process. Simply put, making your trust the owner of your insurance policy means it is no longer considered a part of your estate.

To take advantage of these immense benefits, turn to the Law Offices of James C. Shields. Our trust attorneys possess a wealth of financial knowledge and would be honored to help you shape the future positively.

Creating & Managing a Life Insurance Trust

Establishing a life insurance trust is quite simple and typically involves just two basic steps:

  1. The insured creates a trust and names an independent trustee
  2. The insured can either transfer an existing policy to the trust or enough cash for the trustee to buy a new policy

Most importantly, a life insurance trust must be irrevocable, which means it cannot be altered or terminated. When a life insurance policy has been moved into the trust, you can no longer change the beneficiary of the policy. Gift and estate taxes do not apply to assets held in a life insurance trust, allowing your loved ones to save a great deal of money.

When your trust has been established, your annual contributions are used to pay the insurance premiums. These contributions can qualify for the gift tax exclusion if the beneficiaries have a "present interest" in the funds. By giving your beneficiaries notice of the gift and allowing them a withdrawal opportunity for 30 days, taxes will not apply. In most cases, money is not withdrawn, simply because the beneficiaries understand the true purpose of the life insurance trust.

The success of your life insurance trust is dependent on the care you take while creating it. For nearly 20 years, we've been helping Torrance residents do so successfully. The future of your assets is safe in our hands and contacting our firm is the first step you can take! Contact our estate planning lawyers today.

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