What is the meaning of insurance trust?

Insurance trust by One Pacific Trust is what is known as an irrevocable trust, one that is specifically developed and even engineered to hold life policies. Its primary objective is to manage or dispose of the life proceeds upon or for the benefit of beneficiaries of this particular trust. Additionally, it may be able to provide significant estate tax savings. Here are the key aspects of an insurance trust:

1. Policy ownership: In life insurance trust, the ownership of the policy would lie with the trust and not the person providing the insurance. This, in turn, is how the death benefit paid upon the passing of the insured is kept out of his or her taxable estate.
2. Tax Benefits: An irrevocable trust removes the policy proceeds from the insured's taxable estate, thereby reducing the possible estate tax liability. The insurance policy lists the trust as the beneficiary; on death of the person insured, the proceeds are distributed according to the terms of the trust.
3. Distribution Control: The grantor controls under the insurance trust who gets what insurance proceeds, and when in fact, the beneficiaries will actually receive those proceeds. This can be utilized for long-term financial support, protecting the money from creditors, or managing funds for beneficiaries who may not yet be financially responsible.

Briefly, an insurance trust is an entity and structure providing for ownership of a life insurance policy, some tax benefits, and enormous flexibility in the direction of how life insurance proceeds will be distributed to beneficiaries.