Now that you’re getting older, one of the things you’ve kept up on is your life insurance. You want those around you to have the ability to pay off any debts you have left and to take care of themselves once you pass away.
Initially, you’d left the inheritance to your oldest child with the understanding that they were going to divide that assets equally between themselves and their siblings. You felt like that was fair and that they’d be reasonable.
Lately, though, you’ve noticed them make some poor decisions and get into arguments with their siblings. Is there a better option to help protect everyone’s fair share?
If you have life insurance, consider putting it into a trust
The nice thing about a trust is that you can establish one that will receive your life insurance when you pass away. This kind of trust is known as an irrevocable life insurance trust and will protect your life insurance trust after you pass away.
Once the insurance pays out, it goes into the trust. Then, the trustee distributes the assets according to your wishes. The insurance proceeds are removed from your estate, so they are free of estate tax, too.
Should you tell your kids about your life insurance policy?
This is something that will vary based on your situation. You may not feel like you want to tell them about the policy, but it’s probably a good idea to let at least someone know about it. That way, they’ll know to watch out for it in the case of your death.
You can leave your attorney with their information to contact them about the policy following your death if you would like, or you could leave information and guidance in your estate plan to help them get the inheritance after they meet the requirements you set.
Putting life insurance into a trust can help protect it from being lost, taxed or spent inappropriately. If you’re worried about what might happen to that money, it’s not a bad idea to take steps to protect it by looking into this type of trust with your attorney’s help.