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

A LITA is a valuable estate planning tool that can provide facilitate financial management support for your loved ones even after you are gone. This trust will involve the creation of an irrevocable trust to hold one or more life insurance policies, with the beneficiaries typically being your heirs or other loved ones.

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 irrevocable beneficiary of his life insurance policy and designates the ultimate beneficiaries of his policy in the trust agreement. Upon the grantor’s death, RCBC Trust collects the insurance proceeds and distributes them according to the terms and conditions established by the grantor during his lifetime.

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