Life Insurance in Palm Beach Trusts– does Florida’s prudent investor rule apply?
Lots of Palm Beach estate beneficiaries inherit life insurance and many estate planning attorneys from Boca Raton to Jupiter, Florida advise that life insurance may be 1 part of your estate plan. Many clients have the life insurance held in a life insurance trust, which is different than a Florida revocable trust. Here are some things to consider about life insurance, life insurance Florida trusts and things beneficiaries of life insurance trusts may want to know.
Setting Up Florida Life Insurance Trusts
- Consider whether you want your beneficiary to inherit the death benefits outright or in trust.
- Ask yourself if the beneficiary is competent to handle $$ and manage the death benefits or life insurance proceeds
- If you want a Florida trust, consider creating an irrevocable Florida trust also known as an irrevocable Florida life insurance trust
Who Owns the Life Insurance — the Florida Trust ?
- Select the Florida trustee
- If you don’t know who might be a Palm Beach Trustee, consider that there are many really good estate planning attorneys and Palm Beach trust attorneys from Palm Beach Gardens down to Delray Beach to Boca Raton who may serve
- Considering having your Florida trustee of the life insurance trust apply for the policy
- The trustee = owner, applicant and beneficiary of the life insurance
Q: Who pays the premiums on the Florida life insurance?
A: Talk to you Palm Beach estate lawyer about how to pay the premiums and keep the policy out of your estate and not pay estate taxes on it.
Prudent Investing & Life Insurance Trusts
- Remember that Florida trustees are fiduciaries and are required to invest under Florida’s Prudent Investor Rule or Prudent Investor Act
- Here is the link to Florida’s Prudent Investor Rule, free online : http://www.leg.state.fl.us/STATUTES/index.cfm?App_mode=Display_Statute&Search_String=&URL=0500-0599/0518/Sections/0518.11.html
- But remember that the Florida Trust Code has a special rule or law for life insurance trusts, sometimes referred to as ILITs (irrevocable life insurance trusts)
- Read Florida Trust Code 736.0902, here is the link, free of charge and online: http://www.leg.state.fl.us/STATUTES/index.cfm?App_mode=Display_Statute&Search_String=&URL=0700-0799/0736/Sections/0736.0902.html
- If you are a trustee, you want to read this
- If you are a beneficiary of a Palm Beach life insurance trust and are wondering why the trust has only one investment — the life insurance policy or contract — you definitely need to read this