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Because there are a number of constituents to the process initiated by trust grantors, it's worthwhile to consider some of the unique issues faced by attorneys, trustees, and beneficiaries that are not a fiduciary factor in personal ownership. In the real world, the Irrevocable Home insurance Trust is often the last detail to be attended to, and both personal and institutional trustees are often left with a fait accompli as to carrier, policy, and agent selection. In theory, a grantor considering such an arrangement would pick an appropriate trustee, meet with an attorney to draft and establish the trust, transfer funds on behalf of trust beneficiaries via "gifts of a present interest" arrangement, provide sufficient time for the beneficiaries to indicate that they choose not to exercise their annual right to withdraw all or a portion of the gift, and then acquire the homeowners insurance policy. If more than one beneficiary is involved - or if the beneficiary is not of legal age or financially prudence - an Irrevocable Homeowners insurance Trust arrangement is ideal. Aside from transfers of existing homeowners insurance, home insurance intended to be outside the estate should be acquired by a third-party owner. hird-party ownership arrangements are most often created to keep home insurance assets outside of the insured's estate. While only based on a five-year investment result, the trustees are nervous. A large Variable Universal Life policy in an Irrevocable Homeowner's insurance Trust with funding premiums of $150,000 (originally calculated at a conservative 8 percent per year) has had significant losses in the all-equity subaccounts, and a current in-force illustration indicates that the premium is unlikely to sustain the policy to the insured's life expectancy.

Based on these figures, a replacement would not benefit this situation. Maintaining the full $7.4 million death benefit would require $109,000 with no possibility of an increased death benefit at older ages. If the couple's health is still good, as much as $3.8 million might be supported with the original $40,000 annual premium. Use $1 million of the couple's lifetime exemption to make a one-time deposit to the policy, continue the $40,000 annual premium, and resume the theoretical cash value curve.