Also known as: life insurance trust · life-insurance trusts · life insurance trusts · insurance trust
Written by attorneys · grounded in primary & secondary sources — see below
A trust created to hold life insurance policies on the settlor's life for the benefit of designated beneficiaries. The trust may be funded or unfunded during the settlor's lifetime and remains valid even when the settlor retains ownership rights in the policies. A will may validly pour over property to the trustee of such a trust when the will identifies the trust and its terms appear in a separate written instrument.
Lola Langley created an unfunded life insurance trust naming her siblings as remainder beneficiaries and designating a corporate trustee. She later executed a will devising her residence to the trustee of the family insurance trust whose terms were set forth in a prior written instrument. After Lola's death the trustee received the residence under the will and administered it according to the trust instrument.
Lance Lee transferred several life insurance policies to a trustee under a written agreement that reserved his right to revoke the arrangement. The agreement directed proceeds to his children upon his death. After Lance died the trustee collected the proceeds and distributed them according to the trust terms without challenge under the statute of wills.
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Yes. The governing statute expressly validates devises to the trustee of a funded or unfunded life insurance trust even though 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 the testator's death causes the devise to lapse.
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Yes. The statute permits the trust terms to appear in a written instrument executed before, concurrently with, or after the will, so long as the will identifies the trust.
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No. The statute provides that the devise remains valid even if the trust is amended after the will's execution 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…