Wealth replacement trust
Certified Financial Planner glossary · Certified Financial Planner
Definition
An irrevocable life insurance trust funded to replace, for heirs, the value directed to charity by a charitable remainder trust.
Wealth replacement trust in plain English
Parents fund a charitable remainder trust for income and a charity remainder, then worry the children are short the wealth that went to charity. A wealth replacement trust is an irrevocable life insurance trust funded to replace, for heirs, the value directed to charity by that CRT. Insurance outside the estate often restores the inheritance. It is a complement to the CRT, not a substitute for the charitable vehicle itself. Heirs get policy proceeds while the charity keeps the CRT remainder.
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