What is a life insurance trust?

A life insurance trust is a legal arrangement used in estate planning law in Hawaii that allows individuals to control how their life insurance benefits are distributed after they pass away. A life insurance trust works by naming a third party trustee who has the authority to manage the policy and the benefits. The trust can be used to provide financial support to a spouse or children, pay off debts, or even leave money for charities or other organizations. The trust can also be used to create tax savings, since the beneficiary of the trust will not be liable for any estate taxes associated with the policy’s death benefits. Life insurance trusts can be set up with both term life and whole life insurance policies, though the rules vary based on the state and the insurance company. In Hawaii, the trust must be set up before the policyholder dies in order to have a valid trust. A life insurance trust can also be modified or revoked at any time, as long as the policyholder has the legal capacity to make changes. A life insurance trust can be a powerful tool for those looking to plan for the future and provide for their loved ones after they are gone.

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What is a life insurance trust?

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