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There is no simple answer to the question whether a life insurance policy should be in a trust. The best answer is that it depends on your individual situation, the size of your estate, and what kind of confidence that you are considering.

For example, if you are single, net, and real estate, your assets minus liabilities, is less than $ 1 million U.S. Dollar, you do not need trust, or you want your life insurance in an irrevocable life insurance trust (ILIT). If you are married and your net estate is less than $ 2 million U.S. dollars, you can either use a living trust, an irrevocable life insurance trust or no trust.

There are two types of trusts, which I discuss a living trust or an irrevocable life insurance trust. There are advantages and disadvantages for both instruments confidence.

A living trust is an estate planning that allows you to manage your assets while you are alive and to your family after her death, without the need for which procedures.

A living trust has a Trustor (also GRANTOR), which is the person who has the trust and transfer the property. A trustee is the person that the assets on behalf of the Trustor. It is possible, with a living trust, both the Trustor and the Trustee. There is also a recipient, the person or persons who benefit from the provisions of the trust. Since it is a living trust may be the primary beneficiary during your life, so the Trustor, Trustee, and the beneficiary.

Furthermore, trusts usually have instructions for managing the assets in your life, and instructions on what happens when you die.

A living trust is revocable. This means that you can modify, change or end the life of trust at any time during your life.

Because now there are no estate taxes on an estate worth less than $ 1 million if you are single, and less than 2 million U.S. Dollar, if you are married, a living trust can be a good place to life. But there is another option.

An irrevocable life insurance trust is a tool for planning, especially for life insurance policy. If you have a substantial and that the net estate will be subject to estate taxes, an irrevocable life insurance trust could be a good choice. Since a life insurance in an irrevocable life insurance trust no longer belongs to you, it may not be in your taxable estate.

There are some major disadvantages to an irrevocable life insurance trust. For example, if an irrevocable life insurance trust, it is can not be changed, amended, or terminated during the term.

Secondly, you can not change the beneficiary of the proceeds of life insurance in an irrevocable life insurance trust. For example, if your spouse is the beneficiary in your name irrevocable life insurance trust, and you are divorced, your ex-spouse is still entitled to your life insurance proceeds.

Also, if you have an existing life insurance and an irrevocable life insurance trust, but within 3 years after the transfer date, the trust estate is not expected before taxes.

The truth is, if an irrevocable life insurance trust you are committed to it for life, there is no turning back. If you're not sure you want this insurance the rest of your life, as an irrevocable life insurance trust may not be the way to go.

The bottom line is this: If you are thinking about implementing your life into a kind of trust instrument, you want to contact your accountant, financial planner, and / or an experienced lawyer. The laws regulating certain trusts vary from state to state, so you may want to make sure you have all the facts before it in such a document.

Each individual's financial situation is different, so it may be useful to all the information you need to make an informed decision and then decide whether you need to speak with a qualified professional.

The one thing is for sure is that there is no need to pay more for life insurance than you need. You should life insurance quotes from at least 3 different companies before you apply for a policy.

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