Should I have an irrevocable life insurance trust (ILIT) to protect my death benefit after divorce?

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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UPDATED: Jul 16, 2021

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After a divorce, you may not be sure what to do with your life insurance policy death benefit. It is possible that your children may be too young to take the benefit and use it responsibly or that you have no close family members and have left an attorney in charge of your estate. No matter what your individual situation is, an irrevocable life insurance trust (ILIT) could be a great solution. In an ILIT, the trust is named both owner and beneficiary of your life insurance policy and the trustee determines what happens to your life insurance death benefit once it is paid to the trust or executes standing instructions that you build into the trust. You can do this when you set up the trust documents with your attorney. Simply instruct him or her to write in specific instructions for payment of your benefits. The policy is owned by the trust and that can never be changed. This arrangement can give you greater control over the asset after your death because you can decide how and when your heirs will receive their portion of your death benefit. The trustee of your ILIT must be an impartial third party.

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