[WSBAPT] Life insurance trust

[Lovie Bernardi]

Dear listmates,

 

Clients are a married couple seeking an estate plan. Their combined
gross estate, excluding life insurance, is about $1.5 million in
community property. However, husband owns a $500,000 whole life
insurance policy naming the wife and two term policies totaling $1
million, also naming wife. Wife has a $750,000 term policy, naming
husband. All policies were paid for with community funds. It occurred to
me that a life insurance trust would be worth looking at to keep these
funds from being included in the gross estate of both. Because I have
never written a life insurance trust, I've spent a couple of days
researching the issues and have gleaned the following: (1)In order to
avoid both spouses from having retained an interest in the policy, the
policy cannot be deemed to be community property. Therefore, a separate
property agreement will be necessary for both the policy and any funds
that are used to pay the premiums. (2)Practitioners are encouraged in
the Washington Life Insurance Trust Deskbook to avoid  a spouse as a
beneficiary of a life insurance trust if at all possible. (3)If the
policy or policies are moved to the trust, and the client dies within
three years, it will still be counted in the decedent's estate. Clients,
prior to meeting with me, were considering dropping the two term
policies on the husband's life. They will be meeting soon with their
agent.

 

Has anyone written a life insurance trust? Is the scenario described a
situation that calls for one? Are there alternatives that would be
better to pursue? Thanks in advance for your input.

 

Lovie Bernardi

Attorney at Law

Seligmann & Flaherty, PLLC

216 First AVE S, #450

Seattle, WA  98104

(206) 682-2616

 

lovie at sbfirm.com <mailto:joni at sbfirm.com> 

http://sbfirm.com <http://sbfirm.com/> 

 

 

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