What is a life insurance trust?

A life insurance trust, also known as an irrevocable life insurance trust, is a legal arrangement in which a trust is created in order to own and manage a life insurance policy. This trust is set up in order to provide for the beneficiaries of the insured’s estate upon their passing. A life insurance trust must be set up in accordance with Virginia estate planning laws in order for it to be valid. The trust itself is created with beneficiaries, who are the named individuals that will receive the death benefit of the insurance policy. The insured will use their own funds to purchase the policy which will be placed within the trust. The trust also has a trustee, who is appointed to manage the trust and ensure that the trust’s purpose is satisfied. By utilizing a life insurance trust, the insured’s estate can benefit from the tax advantages often associated with life insurance policies. Additionally, life insurance trusts can prevent the death benefits from going through probate, which can save time and money for the estate. In order to maintain the validity of the trust, the insured must not have any access to the funds within the trust. Overall, a life insurance trust is a great tool for individuals to use for estate planning purposes in Virginia. It provides tax savings and helps to avoid probate, all while ensuring that the beneficiaries of the estate receive their intended bequests.

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What is a life insurance trust?

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