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Life insurance may best be accompanied by trust planning

On Behalf of | May 13, 2015 | Trust Administration |

Many times, obtaining life insurance is an important part of a person’s estate planning strategy. However, in some cases, just simply having life insurance is not enough for California residents. Those with large estates or who have beneficiaries who are not good at managing money may also want to consider creating trusts to go along with their life insurance policies. There are many ways in which a trust can help with administering and managing a life insurance policy and its benefits.

Most people will be fine with simply listing individuals, such as children or spouses, as beneficiaries on their life insurance policies. On the other hand, there are various situations in which it may be better to create a trust and name the trust as the beneficiary of a life insurance policy. This may be a particularly useful strategy if one’s estate’s worth exceeds the federal exemption amount. Meanwhile, some may be looking to protect assets from creditors, while others may have children with special needs.

Choosing the type of trust one wants to create is also important, as each type of trust offers different benefits, as well as different disadvantages. There are simple types of trusts that can be created for the average individual. Those with larger estates may require more complex trust-planning strategies. However, in order to choose the correct type of trust, one needs to understand the laws that govern trusts and be able to apply them to his or her specific situation.

Along with trust planning, there are a variety of other aspects to estate planning that one should consider in California. Each person will have his or her own goals when it comes to estate planning. Estate planning strategies should be tailored to that person’s specific situation.

Source: dailyfinance.com, “How to Supercharge 4 Types of Trusts with Life Insurance”, Jeff Rose, May 7, 2015