Who Should Own Your Life Insurance Policy

Who Should Own Your Life Insurance Policy?

Life insurance is designed to provide financial protection to a person’s family and loved ones. According to data cited by Forbes Magazine, more than half of Americans are covered by some form of life insurance. You may be wondering: Who should own your life insurance policy? The answer depends on some case-specific factors. At Cordoba Law Firm, PLLC, we are committed to providing solutions-driven, personalized estate planning representation. Here, a Lake Jackson estate planning attorney explains the key things to understand about the ownership of a life insurance policy.

You Have Several Options for Ownership of a Life Insurance Policy (Pros and Cons)

Life insurance matters. It can help to provide much-needed financial support to people and families who are going through some of the most challenging times of their life. Who should own a life insurance policy? You may have never thought about it before, but it is an important estate planning question. Here is an overview of the pros and cons of four of the most common options for the ownership of a life insurance policy in Texas:


  • Pros: Self-ownership provides the policyholder full control over the policy, including the ability to change beneficiaries or adjust coverage. Additionally, policyholders can easily access the policy's cash value, if available.
  • Cons: Self-ownership can result in the policy's proceeds being included in the policyholder's estate, potentially subjecting it to estate taxes. Furthermore, it may expose the policy to creditors if the policyholder faces financial difficulties.

Spousal Ownership:

  • Pros: Transferring ownership to a spouse may help avoid estate taxes and protect the policy from the policyholder's creditors. It also ensures the surviving spouse has direct control over the policy.
  • Cons: If the spouse becomes incapacitated or passes away before the policyholder, complications may arise in managing the policy. Moreover, in case of divorce, the policyholder may lose control over the policy.

Adult Child Ownership:

  • Pros: This option can help minimize estate taxes and protect the policy from creditors. It also ensures the policy's continuity even if both policyholder and spouse pass away.
  • Cons: The policyholder relinquishes control over the policy, and complications may arise in case of disputes among multiple children or the child's financial difficulties.

Trust Ownership

  • Pros: A trust-owned policy can offer tax benefits, asset protection, and flexible control by appointing a trustee to manage the policy according to specific instructions. It can also ensure the policy's proceeds are distributed as intended.
  • Cons: Establishing and maintaining a trust can be complex and costly. Additionally, trust-owned policies may have limited access to cash values and require the trustee's consent for any policy changes.

Contact Our Lake Jackson, TX Estate Planning Lawyer Today

At Cordoba Law Firm, PLLC, our Texas estate planning lawyers are skilled, experienced advocates for clients. If you have any questions about who should own a life insurance policy, we are here as a legal resource. Contact us today to set up your fully confidential initial consultation. From our office in Lake Jackson, we help people and families with estate planning matters throughout the region.