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Irrevocable Life Insurance Trusts​

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Purposes:

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  • Prevents creditors of the beneficiary from intercepting the life insurance proceeds

  • Prevents a bankruptcy trustee from intercepting the life insurance proceeds

  • Prevents a very large lump sum of money meant for the benefit of your children from being wasted by someone who is financially undisciplined or financially irresponsible

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The Trust becomes the owner and the beneficiary of your life insurance policy.

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At your death, the insurance company writes a check to your Trustee who deposits the life insurance proceeds into the Trust checking account.

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The Trustee then pays out the life insurance proceeds in the manner you have prescribed in the Trust Declaration for the benefit of your children.

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Common objections:

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  • "I trust my ex-spouse to do the right thing."  Sure you do.  Actually maybe you do, but what happens if your ex-spouse is sued for ANY reason and has a judgment against everything your ex owns?  The judgment creditor will get the life insurance proceeds when you die.

  • "The government will make my ex spend the money appropriately."  There is no governmental agency, to include the courts, that will monitor how your ex spends the money.

  • "My Executor will make sure that the life insurance money is spent for the benefit of my children."  Life insurance is a non-probate asset and your Executor will have no ability to control how your ex-spouse spends the life insurance proceeds.

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