If certain rules are adhered to, it is possible to name a child as owner and beneficiary of a new life insurance policy in a way that will keep the insurance proceeds out of your taxable estate. Generally, premiums must be gifted to the children and the children must pay the premiums. It is extremely important the insured person avoids all incidence of ownership when using this strategy.

Extreme care must be taken if the child is still a minor, or if more than one owner and beneficiary will be named on the same policy. In these types of situations, competent insurance advice is critical. Other advisers on your estate planning team, including your CPA (for gift tax ramifications) and attorney, should also be consulted. 

Additional Information on Estate Planning:

Estate Planning Overview
Irrevocable Life Insurance Trusts (ILITS)
Using Ownership and Beneficiary Designations
How to Get Existing Policies Out of my Estate
Can the Three-Year Rule be Avoided?
Second to Die Life (Survivorship) Insurance
Gifts - Overview
Leveraging Your Gifting Program
Grandchildren
Generation Skipping
Living Trusts
Credit Bypass Trust
Charitable Remainder Trusts
Avoid Capital Gains Income for life

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