SUBPART K.  LIFE INSURANCE IN TRUST

§1881.  General rule

A settlor may create an inter vivos or a testamentary trust upon the proceeds of life insurance.  

If a policy of life insurance is payable to a named beneficiary of the policy as trustee, the trust is an inter vivos trust and the instrument creating the trust shall be in the form required for an inter vivos trust.  The trust is an inter vivos trust although the settlor reserves incidents of ownership with respect to the policy, although the settlor reserves the power to revoke or modify the trust, and although the trustee has no active duties to perform until the death of the settlor.  

If the policy of life insurance is payable to the settlor or to his succession or his succession representative, or to a testamentary trustee, the trust is testamentary and the instrument creating the trust shall be in the form required for a testamentary trust.  

Amended by Acts 1972, No. 658, §1.