george2010
Junior Member
What is the name of your state (only U.S. law)? TX
I'm trying to come up with a clever way to keep life insurance proceeds out of either my estate or my spouse's estate, regardless of which order we die in. I know this could be accomplished with a irrevocable life insurance trust which both owns and is the beneficiary of the policy, but I don't really want to go to that trouble if I can avoid it.
I'm only talking about term life insurance that will last 10 years from now when I will only be 57 and my kids will all be done college. So this is not a case where there is a huge cash value that I am trying to protect.
My idea is this:
1. I will own my spouse's term insurance, and she will own mine. We will have to document that each is owned as separate property, since otherwise in Texas the policies would be assumed to be community property.
2. Now the tricky part that I'm not sure works: In my will, there will be a provision that creates a testamentary "Life Insurance Proceeds Trust", with my kids as beneficiaries, that will receive the proceeds from the life insurance policy that my spouse holds on my life. So if I die, the policy that she owns on my life pays the proceeds into the newly created Trust. My hope is that the proceeds will not be part of my estate, because my spouse owns the policy. But the strange part is that the trust is created by my will, and the trustee is appointed by me, so I want to make sure that my structure wouldn't backfire and result in the life insurance proceeds being viewed as part of my estate, despite my wife owning the policy.
Any opinions/suggestions?
I'm trying to come up with a clever way to keep life insurance proceeds out of either my estate or my spouse's estate, regardless of which order we die in. I know this could be accomplished with a irrevocable life insurance trust which both owns and is the beneficiary of the policy, but I don't really want to go to that trouble if I can avoid it.
I'm only talking about term life insurance that will last 10 years from now when I will only be 57 and my kids will all be done college. So this is not a case where there is a huge cash value that I am trying to protect.
My idea is this:
1. I will own my spouse's term insurance, and she will own mine. We will have to document that each is owned as separate property, since otherwise in Texas the policies would be assumed to be community property.
2. Now the tricky part that I'm not sure works: In my will, there will be a provision that creates a testamentary "Life Insurance Proceeds Trust", with my kids as beneficiaries, that will receive the proceeds from the life insurance policy that my spouse holds on my life. So if I die, the policy that she owns on my life pays the proceeds into the newly created Trust. My hope is that the proceeds will not be part of my estate, because my spouse owns the policy. But the strange part is that the trust is created by my will, and the trustee is appointed by me, so I want to make sure that my structure wouldn't backfire and result in the life insurance proceeds being viewed as part of my estate, despite my wife owning the policy.
Any opinions/suggestions?