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

Related Articles
  1. Financial Advisor

    How to Handle Client Beneficiary Designations

    Beneficiary designations are a critical financial planning step that can be easily overlooked. Here's how to ensure they are properly done.
  2. Insurance

    How To Avoid Taxation On Life Insurance Proceeds

    Decrease the value of your taxable estate and prevent the tax man from getting you one last time.
  3. Retirement

    An Estate Planning Must: Update Your Beneficiaries

    Life changes make it time to rewrite your plan's designations.
  4. Retirement

    Distribution Rules For Inherited Retirement Plan Assets

    If you've recently inherited a retirement plan, you must get to know the rules for distributing the funds.
  5. Retirement

    Top 7 Estate Planning Mistakes

    Many people try to avoid this process altogether, making things difficult for heirs.
  6. Retirement

    Who is a Beneficiary?

    A beneficiary is a person or entity that receives funds, assets, property or other benefits from a trust, will, or life insurance policy.
  7. Retirement

    Mistakes In Designating A Retirement Beneficiary

    Make sure your beneficiary designations not only reflect your intentions but also meet the requirements to be effective.
  8. Retirement

    Who Gets Your Retirement Accounts?

    It’s important to review your financial beneficiary designations every year or two, or whenever you experience a major life change, like a divorce.
  9. Retirement

    Retirement Planning for the Non-Employed Spouse

    A stay-at-home spouse probably racks up more hours working than any office jockey. Make sure he or she is set up to save for retirement, as well.
  10. Retirement

    Be Smart in Naming Beneficiaries of Your 401(k)

    Listen up: Hidden in the pesky details of filling out 401(k) forms are important tax implications. And it's a legacy to people you love.
Frequently Asked Questions
  1. Depreciation Can Shield Taxes, Bolster Cash Flow

    Depreciation can be used as a tax-deductible expense to reduce tax costs, bolstering cash flow
  2. What schools did Warren Buffett attend on his way to getting his science and economics degrees?

    Learn how Warren Buffett became so successful through his attendance at multiple prestigious schools and his real-world experiences.
  3. How many attempts at each CFA exam is a candidate permitted?

    The CFA Institute allows an individual an unlimited amount of attempts at each examination.Although you can attempt the examination ...
  4. What's the average salary of a market research analyst?

    Learn about average stock market analyst salaries in the U.S. and different factors that affect salaries and overall levels ...
Trading Center