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In the case of those beneficiaries for whom there may be a long life expectancy, it may be necessary to select a corporate trustee as a "primary" fiduciary along with an individual who well knows and cares about the particular circumstances. Because of the human element inherent in this type of use, care should be taken in selecting a trustee. These and other similar circumstances lend themselves to the use of customized trusts funded by life insurance.

With baby boomers also considered the "sandwich" generation, they are at the same time both parents of children who will not be able to provide for themselves and children of parents who are not able to fully provide for themselves. Another typical use for life insurance (and another homage to buying life insurance out of love) is to manage the special needs of certain beneficiaries. Those interested in such a design should consult with a professional life insurance agent to make certain they are allocating appropriate premiums at the time the policy is acquired. There is one important caution: The policy must remain in force until death or a substantial amount of what has been taken out of the policy may be subject to current income (not capital gains) taxes.

That accomplished, it's possible to withdraw and/or borrow cash values from an existing policy to help supplement retirement income; under current tax law, cash value loans are not subject to income tax. While cash value is a necessary component of any permanent life insurance policy, participating Whole Life, Universal Life, and Variable Universal Life policies lend themselves to overfunding of premiums for the purpose of generating more cash value than the policy needs to sustain itself. Options include the use of an Irrevocable Life Insurance Trust (ILIT) or direct ownership by the intended beneficiary with premiums paid with annual gifts. Because of life insurance's unique income tax-free status and the ability to establish ownership to avoid inclusion in an estate that would otherwise not incur an estate tax, life insurance is an ideal way to create an estate at death.