Orange County California

Trust Attorneys


Meeting with your estate-planning attorney to review your estate documents in conjunction with your insurance policies is an excellent idea. Insurance is an important aspect of any estate plan. As time passes, you may need to change the ownership of these policies—just as modifications to your other estate documents are needed on an ongoing basis. Your attorney can analyze your current circumstances, along with the details of your insurance policy and estate documents, to help you consider possible revisions to the ownership of your policies. Potential changes and their pros and cons are outlined below:

Life Insurance Policy Ownership Options

  1. Owning a life insurance policy on your own life allows you to maintain control over the policy as well as any cash value it may accumulate. This type of ownership, however, means that any proceeds paid out as a result of your death are included in the value of your estate for estate tax purposes.
  2. Having your spouse own a life insurance policy on your life allows your spouse to maintain control over it and have access to the cash value. If your spouse passes away, however, and you die shortly after, it is possible that the policy would revert back to you and be included in your estate for estate tax purposes.
  3. Having your children own a policy on your life means that you no longer have control over the policy. The proceeds from the policy would be included in the gross estates of your children for estate tax purposes. If the children are minors, this is an especially bad choice because legal guardians would have to be appointed.
  4. Owning the policy in a revocable living trust allows you to maintain the benefit of control over the policy. If you possess any incidents of ownership over the policy, such as the right to change the beneficiaries or terminate the policy, the value of the proceeds will still be includable in your estate for estate tax purposes.
  5. Owning the policy in an irrevocable trust has the substantial benefit of keeping the proceeds outside of your estate for purposes of estate tax calculation. The downside, however, is that you must sacrifice control over the policy and cannot change or revoke the trust once it is set up.

Understanding which setup will work best with your overall estate plan is an important part of keeping your plan current. To learn more about updating your estate plan, call our office today at to schedule a consultation.

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