Life insurance and back child support

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My husband is the beneficiary on my life insurance policies. He owes back child support but has been making regular payments for the past five years. He also owes back taxes. What can I do now to assure that the kids we have together receive the benefits of my policy and not have it all taken away for these back payments that he owes?”

Asked July 31, 2018

1 Answer


I would suggest that you place your life insurance policy or policies into an irrevocable life insurance trust (ILIT). One benefit of an ILIT is that it can't be amended or changed in any form after it is created. You as the Grantor will make the ILIT the beneficiary in place of your husband. Also, you can stipulate in the ILIT exactly how your death benefits will be distributed. Since your husband will no longer be the beneficiary, the ILIT will help keep the creditors at bay. The only problem is when you transfer your current life insurance policies into the ILIT it may trigger the three year look-back rule. Internal Revenue Code 2035 or the three year look-back rule states if you transfer your assets into an ILIT and you should happen to die within a three year period after the transfer, everything reverts back to the estate prior to the transfer. One way you can avoid that problem is to ask your insurer for an estate protection rider.

Answered August 1, 2018 by ronanona

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