Business and Personal Finance Dictionary

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• INSURANCE TRUST
  
  You set up an insurance trust to own a life insurance policy on your life. When you die, the face value of the insurance policy is paid to the trust. That keeps the insurance payment out of your estate, while making money available to the beneficiary of the trust to pay any estate tax that may be due, or to use for any other purpose. If you're married, you may set up an insurance trust to buy a second-to-die policy, which pays face value at the death of the second spouse. That allows either you or your spouse to leave all assets to the other, postponing potential estate tax until the second one of you dies. At that point, the insurance benefit is available to pay any tax that might be due.
  
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