1. What is a Life Insurance Trust Account (“LITA”)?

A Life Insurance Trust Account (LITA) is a trust arrangement where RCBC Trust holds your life insurance policy and upon your passing, collects the proceeds. These are then managed and distributed to your chosen beneficiaries according to your instructions , ensuring a smooth, secure and efficient transfer of benefits.

2. Why would someone set up a LITA?

By setting up a LITA, you can be assured that your life insurance proceeds will be managed and distributed according to your terms and conditions or last wishes.

3. Who are the parties involved in a LITA?

The parties typically include the grantor (policyowner/insured), the trustee (RCBC Trust), and the beneficiaries (those entitled to receive the trust assets).

4. How does a LITA work?

The grantor names RCBC Trust as the beneficiary of the life insurance policy and, through the trust agreement, sets instructions on how the proceeds should be distributed to loved ones. These may be given in lump sum, in installments, or for specific purposes like education or health. Upon the grantor’s passing, RCBC Trust collects the proceeds and distributes them according to these instructions.

5. What happens to the insurance proceeds upon collection by RCBC Trust?

The insurance proceeds are not left idle in the trust account, but will be managed by professionals of RCBC Trust. The insurance proceeds will be invested while the beneficiaries are still minors or incapacitated or pending fulfilment of conditions of the trust.

6. What are the benefits of a LITA?

  • Control and Flexibility: You can specify exactly how and when your beneficiaries receive the insurance proceeds. This allows you to tailor your estate plan to meet the unique needs and circumstances of your loved ones, while ensuring that the purposes for which you bought the insurance policy are documented and carried out.
  • Professional Asset Management: Safeguard your wealth by having skilled investment professionals manage the life insurance proceeds for the benefit of your family.
  • Policy Consolidation: Consolidate multiple life insurance policies under one trust. Instead of dealing with several insurance providers, your beneficiaries can rely on one point of contact, making the process smoother and more manageable during a challenging time.

7. What should I consider before setting up a LITA?

Factors to consider include your financial goals, estate planning objectives, tax implications, and choice of beneficiaries.

8. What are the fees involved in setting up a LITA?

  • Initial Trust Setup / Documentation Fee - Php15,000.00 for the first 3 life insurance policies and P5,000.00 for every additional life insurance policy thereafter;
  • For Sun Life Grepa policies, a flat documentation fee of P15,000 shall be collected, regardless of the number of policies.

9. Are there annual fees in maintaining a LITA?

In the meantime that the insurance proceeds have not been collected by RCBC Trust, there shall be NO annual fees to be charged. Annual Trust Management Fees of 0.5% per annum will be assessed once the insurance proceeds are collected