A thorough estate plan requires that all of your property and assets are distributed according to your wishes after you pass away. Depending on your individual goals and intentions, there can be multiple ways to achieve these purposes. Many estate plans will include at a bare minimum a power of attorney and a will, but working with an estate planning lawyer can help open your eyes to some of the other options available to you.
When you establish a trust, for example, you can fund it with assets that then become owned by the trust. A trustee is appointed to manage the trust and this person has the power to make decisions on how to invest or spend assets. The trust also has beneficiaries and the trustee is responsible for acting in accordance with the interest of the beneficiaries.
In plenty of cases the beneficiaries of a trust will be minor children and the trustee is, therefore, responsible for verifying that their needs are taken care of. A grantor can use many different types of assets to fund a trust.
One common example is to fund a trust using a term life insurance policy. After the grantor passes away, the payoff from the policy goes directly into the trust and is only available for the beneficiary of that trust.
If a permanent life insurance policy like whole life insurance is used, then the funds inside that trust will continue to be replenished as the policy earns money. This can be a very powerful estate planning solution for those families and individuals who do not have many assets.
The life insurance policy can be transferred into the trust either by naming the trust as a beneficiary or by making the trust the owner of the policy. For further questions about this process, schedule a consultation with a dedicated estate planning lawyer in Pasadena, CA.