Marcie is the divorced mother of two children in their 20s, who will be her beneficiaries. Neither is sensible with money. Marcie has an estate of $700,000, plus universal life insurance that will pay $500,000 at her death. She wants to be sure her estate will not be liable for estate taxes, and so desires to transfer ownership of her policy. However, there's no one Marcie trusts enough to give her policy to outright.

She decides to create a life insurance trust with her sister as trustee. She transfers ownership of the life insurance policy to her sister as trustee. After Marcie's death, her sister will handle the money for the children under the terms of the trust document.