By: Douglas Levy Michigan Lawyers Weekly
Life Insurance ClaimPeople who hold insurance trusts now have clarification as to who receives death benefits from those trusts, under new laws signed by the governor last month.
But because of recent changes to the estate tax laws, Holland attorney Mark K. Harder said that he doesn’t expect a stampede of people clamoring to form an insurance trust as a result.
A life insurance trust is an irrevocable, nonamendable trust that is both the owner and beneficiary of one or more life insurance policies. When the insured dies, the trustee invests the insurance proceeds and administers the trust for one or more beneficiaries.
Owners of life insurance have long been required to have an insurable interest in the life of the insured under the policy. But Public Acts 7 and 8, signed by Gov. Rick Snyder on Feb. 11, make clear when that longstanding requirement has been fulfilled, and describe circumstances under which the trustee will have an insurable interest in the life of the grantor of the trust.
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