Terrible advice. The estate will be taxed, which will probably suck up at least half of the value of the insurance policy.
OP, if you have a minor child, you'd better have a will, where you make preparations for said child in the event of your death. See a lawyer, STAT.
Really?
#1 Unless rudeguy's estate is over $1,000,000 (2013 and beyond, this year the lifetime gift exemption is $5,000,000) the estate tax does not apply. No matter what his net worth, it would take 3 years from the date of gifting assets/money to an irrevocable trust to fully remove it from his estate.
#2 I clearly stated that he should change the beneficiary designation to his estate and draft a will which spells out his final wishes, including what is to be done with the life insurance death proceeds. -
then draft a will which delegates your estate- This is more important than the trust even if he has a taxable estate, because it would settle all kinds of arguments that could arise (and they do), arguments that cost lots of money to settle.
#3 I also said he should draft a trust and move assets, including the LI policy, even if it's term with no cash surrender value, to it. -
Later you can set up a trust to hold assets outside of your estate, and change the ownership and beneficiary to the trust- This isn't necessary though if his estate won't be taxed, but it can't hurt either. A revocable trust may work just as well in his case.
#4 I advised he seek legal counsel for ALL of this. -
hire an attorney who specializes in wills and trusts- You can pay for an attorney at one of two times, now or later. Later always costs far more.