Also known as: insurance trusts · life insurance trust
Written by attorneys · grounded in primary & secondary sources — see below
A trust created to hold legal title to life insurance policies for the benefit of designated beneficiaries. The trust may be funded or unfunded during the settlor's life and remains valid even if revocable or amendable.
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Valerie created an unfunded life insurance trust naming her siblings as remainder beneficiaries and Erin as trustee. Her will devised her residence to the trustee of the family insurance trust whose terms appeared in a prior written instrument. Valerie later signed a revocation document but left it in her desk without notifying Erin. After Valerie's death the devise lapsed under the governing statute because the trust had been revoked before death.
Ames deposited multiple life insurance policies with a corporate trustee under a written agreement. He retained the rights to exercise options under the policies, to vote stock held by the trust, and to revoke or amend the trust at any time. The arrangement was upheld as a valid inter vivos trust despite the extensive powers Ames kept over the policies.
Yes. The statute expressly validates a devise to the trustee of a funded or unfunded life insurance trust even when the settlor retains ownership rights in the policies.
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The devise lapses unless the will provides otherwise. The statute states that revocation or termination of the trust before death causes the devise to lapse.
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Yes. The statute provides that the devise remains valid even if the trust is amended after the will is executed or after the testator's death.
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…made to the trustee or trustees of a trust established or to be established by the testator . . . including a funded or unfunded life insurance trust, although the trustor has reserved any or all rights of ownership of the insurance contracts, if the trust is identified in the will and the terms of the trust are set forth in a written…