Florida Life Insurance Trusts
Florida Life Insurance Trusts hold billions and billions of dollars. And with good reason. Most Floridians have some type of life insurance. And if you place the insurance into an irrevocable trust the correct way, it can be income and estate tax free. But, admittedly, there can be a lot of probate litigation of life insurance and trusts when the insured life dies. A March 31, 2021 opinion from the 4th District Court of Appeal tells us how to interpret, or read, insurance contracts when there is a disagreement. We have previously provided commentary on DIVORCE and LIFE INSURANCE. Now, let’s discuss policy construction or interpretation. For a free legal video of how to make a claim for life insurance money, CLICK HERE.
Life Insurance’s Role
Life insurance shifts the risk of loss to another — the insurance company. It is used by family law or divorce attorneys in Florida a lot. Many times, a divorcing couple have minor children. When they get divorced, often someone is getting life insurance for the minors. In the corporate or business context, Estate Planning Lawyers often see companies purchase life insurance. They want money if a key employee or executive dies. For family businesses, life insurance can create liquidity to pay estate taxes or expenses when a wealthy individual dies. But many times parties have a disagreement about a CHANGE OF BENEFICIARY to a policy. Many times former spouses or ex spouses fight over ENTITLEMENT to a life insurance contract after the death of one spouse. Florida has a specific Probate Law on this topic. What happens to a policy when there is a divorce but a former spouse’s name is the beneficiary? You can read Florida Probate Code 732.703 for free.
Florida Life Insurance Trusts
Many times, Florida Estate Planning Attorneys will recommend that the policy be placed in an irrevocable trust. But you have to do this the correct way or some of the benefits of the insurance can be at stake or lost. Generally, a trust is created. The trustee is the applicant for the insurance. Her job is to apply for the policy and make sure the premiums are paid every year. She may also want to monitor the policy to see how it’s doing over the years. After all, there are many types of insurance policies. Some have an investment component that may or may not do well. Other policies don’t have an investment component: they are “pure” insurance.
4th DCA Opinion on Insurance Contracts
You can read a March 31, 2021 4th DCA Opinion on Insurance Contract Interpretation for free. Although this case did not deal with a LIFE INSURANCE contract, it told us how to interpret an insurance policy. Put another way: how to you read an insurance policy if there is a disagreement? Probate Litigators who SPECIALIZE in life insurance litigation often refer to this as policy construction or contract construction or interpretation. Experienced life insurance litigators often file “dec actions” asking a judge to construe or interpret what a policy says. The 4th DCA told us how to read a policy: “Insurance contracts are construed in accordance with the plain language of the policy. ” Ambiguous provisions are liberally construed in favor of the insured and strictly against the insurer. This rule of “liberal” construction in favor of the insured applies only when a genuine inconsistency, uncertainty, or ambiguity in meaning remains after resort to the ordinary rules of construction. That language and helpful guidance is great if one is going against an insurance company. But many times, there are multiple beneficiaries fighting over the insurance proceeds. They may interpret a part of the policy differently. In the case of a Florida Life Insurance Trust, the role of the trustee in that trust litigation is crucial. There is a whole INSURANCE CODE that you can read for free from the Florida Statutes. Want to read more about reading or interpreting an insurance policy in Florida? For another INSURANCE opinion from the 4th DCA also issued on March 31, 2021, CLICK HERE.