CFP

By Investopedia AAA

Use Of Life Insurance In Estate Planning - Ownership and Beneficiary Consideration

Ownership and Beneficiary Consideration
Beneficiaries are people or entities that you leave the life insurance proceeds to. But who should receive the insurance policy proceeds? Generally the automatic response is: "My spouse, if living, otherwise, my then living children." Ownership and beneficiaries may have advantages and/or disadvantages for several reasons, and the alternatives demand consideration.

Proceeds left to a spouse to receive at death provide for income that may be lost due to the death, but also the proceeds become subject to the claims of the spouses creditors and possibly subject to the surviving spouse's new spouse. Children are subject to the same circumstances as a spouse but they also may be minors resulting in a guardian accessing the funds. Designating your estate as a beneficiary will result in the proceeds passing through probate. The proceeds may also be subject to creditors' claims as well as increasing the taxable estate for estate taxes.

The ownership of life insurance and designation of the beneficiary of life insurance requires much more than passing consideration. Irrevocable Life Insurance Trust

You May Also Like

Related Articles
  1. Several things factor into the salary of a financial advisor. Here's a look.
    Investing Basics

    How Much Does A Financial Advisor Earn?

  2. With a long list of risks, losses associated with foreign exchange trading may be greater than initially expected. Here are the top 5 forex risks to avoid.
    Economics

    Top 5 Forex Risks Traders Should Consider

  3. ISAs are financial instruments that allow students to raise funds to pay for their degrees by selling shares in their future earnings.
    Investing Basics

    Funding Higher Education With An ISA

  4. Top Ways to protect your purchases from credit card hackers or security breaches.
    Credit & Loans

    7 Ways To Protect Against Credit Card ...

  5. The Internal Revenue Service's new 2015 contribution limits for tax-deferred savings plans are higher; here's what you and your clients should know.
    Investing Basics

    New 2015 Contribution Limits: Advisors ...

Trading Center