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It used to be that holding such accounts in an ILIT killed the tax-advantaged liquidity features, but that is no longer the case, so in terms of asset protection you can now often eat your cake *and* have it too.

I usually see ILITs used for estate planning rather than asset protection, but that's neither here nor there. However, I'd be thinking that an ILIT that benefits the grandkids could result in the trust assets being included in the various financial aid formulas for the beneficiary (ies). I don't know about FAFSA offhand but do know that different colleges use slightly different methodologies. I suspect rad knows far more about this aspect than either you or I.

-synchronicity
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