Determine what the purpose of the life insurance trust will be and estimate how much money will be needed to meet your goals. For example, if you wish to provide for your burial and support your family for a designated amount of time, you will need to determine how much the cost of these items will be.
Choose a beneficiary carefully. You cannot change the beneficiary once you set up a life insurance trust. In most cases, the beneficiary is an immediate family member.
Calculate the costs of having an irrevocable life insurance trust fund and determine if you can afford it for the life of the policy. You will not be able to directly pay the premiums once you purchase the life insurance policy; however, you can make "gifts" to the trust to help the trustee pay the premium.
Select a trustee to manage the trust. You can consider naming a trusted adult friend or relative as the trustee to purchase the life insurance policy. Another option is to appoint a bank or financial adviser to make the purchase and pay the premiums yearly.
Contact your estate-planning attorney to help draft and review the documents. You can also have your financial planner set up your life insurance trust, but it is best to have your attorney review the documents before you sign anything.
