Posted by Some Chinese families first wrote trust documents, or will documents, and then applied for life insurance; or applied for multiple insurances many years ago, and now they have established a family trust or are preparing to write a will.thatWhat is the relationship between life insurance, wills, and trusts?What should we do?Under the above circumstances, what are the most frequently encountered problems?insurGuru©️Fortune AcademyIn this column, I will share the following 4 most common questions.
1. The difference between life insurance and will/trust
Wills, trusts, and life insurance are all important legal documents.The relationship between the three can be regarded as independent and equal.
Through the use of these three alone or in a flexible combination, they are applied in the field of wealth inheritance and estate planningIt can help different families achieve their financial goals.
2. Can I reassign the insurance beneficiary in the will and trust?
No.
You cannot use wills and trusts to modify or cancel a beneficiary of life insurance.Only the owner of the life insurance can specify who will be the beneficiary of this insurance. After your death, the beneficiary will receive a death claim.
Please note,Any asset contract that specifies a beneficiary is not subject to the control of wills and trusts.Asset contracts that can specify beneficiaries include but are not limited to: bank cash deposit accounts, IRA retirement accounts, 401k accounts, teacher pension accounts, life insurance claims, etc.
When you die, such assets will be paid directly to the beneficiary.
(>>>Recommended reading:Popular Science｜How to pass on US cash deposits to beneficiaries?Is there any additional cost?）
3. Must my life insurance beneficiary and my will/trust beneficiary be the same?
No need to.
Back to point 1 again,Life insurance, wills,trustThese three are equal and independent.These three can be processed and set separately, or combined. The decision is up to us.
The exception is that in the implementation of "Joint propertyIn the following states under the system, the spouse may default to become insurance, will, and trustBeneficiary.
- Arizona
- California
- Idaho
- Louisiana State
- Nevada
- Texas
- Washington state
- Wisconsin
4. Can a trust be used as a beneficiary of life insurance?What are the benefits?
can.
We usually write aLifetime trust, To show how you want to deal with the issue of property and child custody behind you.
Life insurance claims also belong to the category of "assets".If we don’t want to pay the life insurance claims directlyBeneficiary(Such as underage), we can also puttrustAs the beneficiary of the life insurance policy, come to receive this property.
We can in the trust document,According to your own wishes, add clauses on how to manage and dispose of this claim.This is one of the benefits of using a lifetime trust and life insurance together.
Article summary
In reality, there is not much overlap between wills and life insurance. In the final analysis,It lies in the compensation of life insurance, which is the money paid by the insurance company, Not our own money, therefore, not subject to our will.
The trust is similar to setting up a virtual company and hiring a "professional manager" to handle assets according to our wishes.For specific articles about lifetime trusts, you can visit the past column of American Life Insurance Guide: "Learn what is a living trust in 1 minute, and what are its functions?. "
We can also choose to hand over the life insurance claim money to this "company" to take care of, or we can choose to leave it directly toBeneficiary, This decision can be changed and can be made at any time, and the entire business execution process is also flexible and mature.
If you already have your own family trust and decide to manage life insurance claims through the trust, or want to separate the beneficiaries of life insurance claims from the trust, you can contact yourLife insurance broker, Submit an application to modify the beneficiary of life insurance to realize the combination or separation of life insurance and trust. (End of full text)
appendix
*"How to Choose Beneficiaries for Life Insurance Policies", 2021/01/13, Julie Garber, https://bit.ly/3plMFSb
*The "trust" mentioned in this article represents a revocable trust during a lifetime.
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