Funding a trust with life insurance

| Oct 19, 2020 | Estate Planning |

A will is an important part of your Georgia estate plan. However, when you have specific goals in mind or wish to maximize how much of a legacy you have to leave behind, you may want to think about trusts. Several different types of trusts exist, including revocable and irrevocable trusts. There are also several different ways in which to fund them, and one popular way to do so involves funding it using life insurance.

According to Forbes, you may want to think about funding a trust using life insurance if you have minor children you want to provide for after your death. This is an economical way to leave behind a lasting legacy. If you are in a two-parent household, you may want to make your partner the primary beneficiary and the revocable living trust the secondary one.

How it works

Upon your death, the beneficiaries you name should receive the amount listed on your life insurance policy. If you have minor children, it is the job of the trustee you appoint when you create the trust to see that your children receive what you intend.

Benefits

In addition to giving you a way to look out for your children once you are not around, setting up a trust and funding it with life insurance should also free up money your beneficiaries may need to access right away. That way, they are more likely to have what they need to cover your funeral and burial expenses and the costs associated with settling your estate, among other expenditures they may encounter after your death.