Life insurance trusts and estate planning in Nevada

On Behalf of | Feb 12, 2015 | Estate Planning

One of the most common assets that an individual will hold is a life insurance policy. However, they can be problematic when it comes to estate planning. One way to get around these issues is to create an irrevocable life insurance trust. What the trust will do is hold the insurance policy outside of the estate. At the same time, it still allows an individual control over who gets to benefit from the policy.

For instance, the individual who creates the trust and puts the policy in it gets to choose who the initial beneficiaries are. In addition, he or she will be able to choose who gets to act as trustee. In exchange for allowing the trust to hold the policy, it can lower the estate tax bill that an individual’s family has to pay at the time of that person’s death.

As an irrevocable trust, it cannot be changed by the person who creates it. In other words, the person who puts the policy in the name of the trust cannot take it out and instead put it in his or her name. While this may seem like a problem, the person who makes the trust may still determine how a beneficiary receives funds from the policy, which often can be in the hundreds of thousands of dollars.

Creating a trust can be a resourceful way to create the type of estate that meets an individual’s needs as well as the needs of his or her family. Those who are interested in creating an estate plan may wish to talk to an attorney. An attorney may be able to create or witness the signing of documents to ensure that they are valid under state law.