How do you set up a Life Insurance Trust?
1. Ask yourself what is the sole purpose of this particular life insurance trust will be.
2. Figure out how much financing will be needed to meet the requirements. If this is for a funeral, for instance, you're going to need to estimate the cost of all that is involved with this service.
3. When it comes down to selecting a beneficiary, choose wisely as you will not be able to alter this detail once you set up your life insurance trust, this is completely irreversible once you have made your decision. Most people usually choose a close family member as the beneficiary.
4. Determine what it would cost for an irrevocable life insurance trust (an irrevocable life insurance trust simply means the policy can't be altered or changed once you set it up). Considering that you can't pay premiums directly for this once you purchase it, you can send the trustee 'gifts' that will assist in funding the premium.
5. Decide who you will select as your trustee to manage the life insurance trust fund. Do you have a close friend or relative? Select one of them as the trustee who will purchase it. Even financial advisors are not out of the question.
6. Last but not least: You can either have whoever plans your finances set up the life insurance trust for you or simply get in touch with your estate's attorney. Your attorney will help prepare and review all of the necessary documentation. However, at the end of the day, it is in your best interest to let your attorney take care of this matter prior to anything getting signed by you.