If you are ready to make some estate planning decisions, you may already know that you have a lot of options from which to choose. Like others in Florida, there is no “best” type of estate plan that fits everyone. There is really just the “best” estate plan for you. If you have minor children and also have or wish to purchase life insurance, you might want to consider a life insurance trust.
As explained by Nerd Wallet, a life insurance trust isn’t really a different type of trust as it can be a standard revocable or irrevocable trust. The difference is that your life insurance policy will be among the assets that names your trust as the beneficiary. This is a unique approach as many people even with trusts maintain separate beneficiaries for life insurance policies. But, if your beneficiary is a minor child, or even a very young adult, you may not want to go this route.
Imagine a 20-year-old receiving a large sum of money all at once. Even the most responsible person has a high risk of not using the money as wisely as possible. With a life insurance beneficiary payout, there is no other option than for your beneficiary to receive that lump sum. However, with a trust you can identify almost any structure of payments and uses for funds you want. It allows you to ensure that college, home purchases or other things are provided for before frivolous items.
This information is not intended to provide legal advice but general information about life insurance trusts and when they may be beneficial for residents in Florida.