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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

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