Which Trust to set up? 21 Answers as of July 18, 2013

I am single and have a minor child. I have life insurance through my employer. I want to set up a Trust for the life insurance funds in the event of my death. Should I set up an Irrevocable Trust or an Irrevocable Trust Funded by Life Insurance? I only want to speak about the life insurance monies in the Trust agreement. If you have any other suggestions, please let me know. Thanks.

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Law Office of Thomas C. Phipps | Thomas C Phipps
Do an irrevocable trust for life insurance. If you want to put any other property in trust, do a revocable trust wit you as the trustee.
Answer Applies to: Missouri
Replied: 7/18/2013
Durkin Law, P.C.
Durkin Law, P.C. | Roger Durkin
The question becomes, who do you want to get the life insurance; your child? or others. The issue appears to be protecting your child. If you want your child to get it at a date later than your death... say at 21, then yes an irrevocable trust might be the answer; however you will need a trustee, guardian type and you have to be concerned that the life insurance provided by your employer may end with employment or you may have to bear the cost of the life insurance. An irrevocable trust cannot be altered later,
Answer Applies to: Massachusetts
Replied: 7/18/2013
Goldsmith & Guymon
Goldsmith & Guymon | Dara Goldsmith
Since it is an employee benefit, an irrevocable life insurance trust will not provide the type of benefit you are looking for. Just name your regular trust as the beneficiary.
Answer Applies to: Nevada
Replied: 7/17/2013
Frederick & Frederick PLC | James P Frederick
Unless your estate is more than $5.25 million, then you should not be setting up ANY kind of irrevocable trust. A revocable trust would be just fine.
Answer Applies to: Michigan
Replied: 7/17/2013
James Law Group
James Law Group | Christine James
You need to meet with an attorney to discuss what you are trying to accomplish. Generally irrevocable trusts are not the best way to go, especially with a minor child, because things change over time. If you are simply trying to provide for your child in the event something happens to you, you will have much more control and flexibility with a revocable instrument that can do the same thing. At James Law Group we make every effort to respond to you quickly and efficiently. This means we may be responding to you from a mobile device. As you know, responding on these devices can result in typographical errors that my otherwise not occur. In order to provide this extra service, please be aware of this and excuse any errors that may be caused by responding in this forum.
Answer Applies to: California
Replied: 7/16/2013
    Minor, Bandonis and Haggerty, P.C.
    Minor, Bandonis and Haggerty, P.C. | Brian Haggerty
    The labels you refer to are only that, labels, with no real meaning. If you set up an irrevocable trust, and it is funded by life insurance, that's an Irrevocable Trust Funded by Life Insurance. The terms of the trust matter. Please do this as part of a general estate plan, with a good lawyer. Getting something off the internet is going to cost your child more in the long run.
    Answer Applies to: Oregon
    Replied: 7/16/2013
    S. Joseph Schramm | Joseph Schramm
    You can establish a minor's trust and give the insurance policy to the trust as a gift with the proceeds being paid to it. As long as the premiums were being paid the trust would have an asset in it. However, irrevocability is a concept which should be used sparingly because once the gift is made to the trust you lose all enjoyment and control over it. Irrevocability is often used to mitigate or to avoid the effects of state inheritance taxes or federal estate taxes and, unless you anticipate leaving an estate of several millions of dollars, you might wish to make any minor's trust arrangement an revocable one. This would allow you the option to modify or to revoke the trust should there be a change of circumstances.
    Answer Applies to: Pennsylvania
    Replied: 7/16/2013
    Ben T. Liu Law Office
    Ben T. Liu Law Office | Ben T. Liu
    You probably want to establish a revocable trust so you can amend it anytime.
    Answer Applies to: Michigan
    Replied: 7/16/2013
    Estrada Law P.C. | Michele Ungvarsky
    Actually either would do the same. The most important part of the whole process will be funding the trust with the life insurance which means that the beneficiary will have to be changed to name the trust not your child(ren).
    Answer Applies to: New Mexico
    Replied: 7/16/2013
    Charles M. Schiff, Attorney at Law
    Charles M. Schiff, Attorney at Law | Charles M. Schiff
    If you are attempting to remove life insurance proceeds from your estate for "estate tax" purposes, you want a trust to be irrevocable. This means that the insurance policy is owned by the beneficiary(ies) of the trust. You would give up any right to make any future decisions concerning this policy. This is most commonly done with an insurance policy that you own. I am not sure of the ownership of this policy given that you say that it is "through my employer". You may have no ownership interest, only a right to direct the proceeds. In that case there is no asset with which to fund a Trust. You can build a trust into your Will. This is called a "testamentary trust" and is created upon probate of your estate. If you choose to fund the Trust exclusively with life insurance proceeds, you can do so. In this case, insurance proceeds are treated as assets transferred as a result of your death and would be included in your taxable estate.
    Answer Applies to: Minnesota
    Replied: 7/16/2013
    Danville Law Group | Scott Jordan
    Why do you want an irrevocable life insurance trust? Just set up a living trust and make the trust the beneficiary of the life insurance proceeds. If you die, the trust automatically becomes irrevocable and your child will be the only beneficiary of the trust.
    Answer Applies to: California
    Replied: 7/16/2013
    Stephens Gourley & Bywater | David A. Stephens
    The nature of the trust depends a great deal on the assets owned by you in addition to the life insurance and the face amount of the life insurance policy.
    Answer Applies to: Nevada
    Replied: 7/16/2013
    The Curran Law Firm
    The Curran Law Firm | Maura Curran
    Your needs are not necessarily the same as your friend, neighbor, sibling. It is difficult to tell you what you should do because you are unique, this is not cookie cutter work. You need to talk with an attorney to discuss what you need. You should not undertake preparing a trust without an attorney.
    Answer Applies to: Florida
    Replied: 7/16/2013
    James T. Weiner & Associates, P.C.
    James T. Weiner & Associates, P.C. | James T. Weiner
    I would set up a revocable trust which becomes irrevocable if you die... that way you are not locked into anything.. Have your parents, or another trusted sibling, be the successor trustee Why do you want an irrevocable trust anyway?
    Answer Applies to: Michigan
    Replied: 7/16/2013
    Gates' Law, PLLC | Thomas E. Gates
    You will start a Irrevocable Trust for your child using the insurance money.
    Answer Applies to: Washington
    Replied: 7/16/2013
    Arthur H. Geffen, P.C.
    Arthur H. Geffen, P.C. | Arthur Geffen
    This is not a simple question to answer without knowing a great deal more about you, your employer and your financial situation. Basically, unless your total estate, including all life insurance proceeds exceeds $5,000,000, an irrevocable trust is not worth the expense and the hassle. If your employer provides the insurance, it would be difficult to do an irrevocable trust anyway. That leaves only a revocable trust as a viable choice as the beneficiary of the life insurance policy. That trust would become irrevocable upon your death and the funding of it via life insurance.
    Answer Applies to: Texas
    Replied: 7/16/2013
    Peters Law, PLLC
    Peters Law, PLLC | Mark T. Peters, Sr.
    I would suggest setting up the trust in your Will so that the proceeds go to your estate. You will have a number of other properties to dispose of. So you may have all of the estate go into the trust, just the insurance proceeds or a combination.
    Answer Applies to: Idaho
    Replied: 7/16/2013
    Martin Barnes - Attorney at Law
    Martin Barnes - Attorney at Law | Martin Barnes
    There are several options to be considered. In the absence of special circumstances, I would suggest that you prepare a will with provisions for a testamentary trust with your child as beneficiary. Fund the trust with proceeds from the life insurance policy. You will want to name the trust itself as the beneficiary of the life insurance contract. The language used in the trust is important. I encourage you to work with an Indiana attorney who lives near you in order to make sure the documents are prepared properly. Best of luck, Martin Disclaimer: The response above does not form an attorney-client relationship, nor is it intended to be anything other than the opinion of the author. It should not be relied upon as legal advice.
    Answer Applies to: Indiana
    Replied: 7/16/2013
    Law Office of Jessica R. Barsotti | Jessica R. Barsotti
    Unless you have a very large estate that will subject you to inheritance tax (ie over $3 million) you may not need to set up a life insurance trust. Those are normally used to provide the proceeds of a large life insurance policy to a beneficiary and avoid estate taxes. If you do have this issue, I would consult an attorney, but in essence you should set up an irrevocable life insurance trust. A revocable trust will not provide you with the tax benefits. If you do not have this issue, you could probably just designate your child as the beneficiary of the proceeds and set up a regular revocable trust to manage the assets in the event that your child is still a minor when you pass.
    Answer Applies to: California
    Replied: 7/16/2013
    Kokish & Goldmanis, P.C.
    Kokish & Goldmanis, P.C. | Bernard H. Greenberg
    They are one and and the same. Work with an attorney specializing in estate planning to avoid any confusion in the nickname of trusts.
    Answer Applies to: Colorado
    Replied: 7/16/2013
    Attorney At Law | James G. Maguire
    You would set up a REVOCABLE trust, and make the trust the beneficiary of the policy. The trust should be revocable because when the minor child reaches the age of majority (or some other age you determine), you would want the funds to go to the child directly rather than into the trust.
    Answer Applies to: Louisiana
    Replied: 7/16/2013
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