Also known as: unfunded life insurance trust · ULIT
Written by attorneys · grounded in primary & secondary sources — see 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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Yes. 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.
Supporting sources
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 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…