How to name beneficiaries and fund a trust at Colonial Life

A trust can be named as beneficiary of a group term life certificate, though the certificate itself cannot be transferred.¹

Accident, disability, critical illness, cancer, hospital indemnity and dental and vision policies pay the policyholder during life. A trust can be neither their beneficiary nor their owner.¹

A living trust can be named in the format "James Edward Doe Trust Agreement date February 1, 2007; Mary Jane Doe, Trustee", with the trust's name, the date it was established and the address where it is held.²

A trust created by the insured's will can be named in the format "James Edward Doe Trust created in the instrument admitted to probate as the Last Will and Testament of the Insured; Mary Jane Doe, Trustee".²

The estate can be named. Colonial Life warns in writing that the proceeds then go through probate with the rest of the assets and cannot be paid directly to the family.²

Colonial Life also warns that proceeds paid to the estate, though normally tax exempt, may incur estate taxes and may be reduced by the claims of creditors.²

A minor can be named, but Colonial Life may not be able to pay proceeds to a minor unless a court-appointed conservator or custodian has been designated for the minor's property in advance planning documents.³

A funeral home can be named "As Interest May Appear", with a second primary beneficiary named "for remaining balance" to receive anything left after the funeral home's expenses.³

Primary and contingent beneficiaries can be named. Percentages must equal 100% where more than one primary is named; unless otherwise specified, proceeds are paid in equal shares.³

The policy owner signs, and a witness signs in ink and prints their name and address. The witness must be someone other than the insured, a beneficiary listed on the form, or the policyowner.³

If the current beneficiary was designated irrevocably, that beneficiary must also sign. An irrevocable designation cannot be changed without their consent.³

An agent under a durable power of attorney may change the beneficiary for the policyowner. A copy of the power of attorney is returned with the form, and the agent signs "Jane M. Doe, POA for John W. Doe, Policyowner".²

A spouse or former spouse may have an interest in the proceeds or accumulated cash value if premiums were paid with community funds. Colonial Life puts the burden of obtaining any required consent on the policyowner.²

Completed by the policy owner, with an independent witness. Available to download.³

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If no beneficiary is designated, Colonial Life states that in most cases benefits are paid to the insured's estate, though some policies name who is entitled if no beneficiary was named or the named beneficiary died first.²

The form has a grandchildren's clause box: when it is ticked, a child's share passes to that child's children if the child dies first.³

Proceeds cannot be paid to a minor, or to a minor's natural parents for the child's benefit, unless the parent has been appointed by the court as guardian of the child's interest.²

Without Letters of Guardianship or Conservatorship, Colonial Life holds the proceeds, with interest, until the minor reaches the state age of majority.²

When the beneficiary is a trust, Colonial Life's Life/Accidental Death Claims Checklist asks for trust documentation that names the successor trustee or trustees.⁴

Ownership can be transferred to an irrevocable trust on the individual term and individual whole life policies, which Colonial Life states can be kept when you change jobs or retire.¹

Group term life is a certificate under the employer's master policy and cannot be transferred to a trust.¹

Accident, disability, critical illness, cancer, hospital indemnity and dental and vision policies pay the policyholder during life and cannot be owned by a trust.¹

For life insurance policys. Completed by the present policy owner and the new policy owner. Available to download.⁵

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Form #14001 amends the policy so that the right to change the beneficiary and all other rights, benefits, options and privileges conferred by the policy, including the right to assign, "belong exclusively to" the new owner.⁵

The form takes a contingent policy owner. It states that if none is assigned, ownership on the new owner's death transfers to the estate of the deceased policy owner.⁵