Also known as: unfunded life insurance trust · ULIT
Written by attorneys — see sources below.
An inter vivos trust whose sole asset consists of a life insurance policy on the settlor. The policy produces no current income or corpus until the insured dies.
Ursula Ung created a written trust holding only a life insurance policy on her own life and named her brother as beneficiary. Two years later she executed a will leaving her brokerage account to the trustee of that same trust. After her death the court directed the account into the trust for administration under its existing terms rather than through probate.
Ulric Unger established an unfunded life insurance trust naming his siblings as remainder beneficiaries. He later signed a will pouring his residence into the trust but then executed a revocation document that he never delivered to the trustee. After his death the court held the devise lapsed, so the residence passed through the estate instead of the trust.
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View caseYes. The statute expressly validates a will's devise of property to the trustee of a trust established during the testator's lifetime, including an unfunded life insurance trust, provided the trust is identified in the will and its terms appear in a separate written instrument.
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The devise lapses unless the will provides otherwise. The statute states that revocation or termination of the trust before the testator's death causes the devise to lapse.
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No. The statute permits pour-over devises to unfunded life insurance trusts regardless of the existence, size, or character of the trust corpus.
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No. 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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…may be made in form or in substance to the trustee in accordance with the terms of a written inter vivas trust, including an unfunded life insurance trust although the settlor has reserved all rights of ownership in the insurance contracts, if the trust instrument has been executed and is in existence prior to or contemporaneously with the…