Incorporating life insurance into an estate plan goes beyond simply purchasing life insurance. Since these policies allow you to list direct beneficiaries and essentially bypass anything outlined in a will, you must make special arrangements to maintain more control over life insurance proceeds. Here’s a closer look at this topic and the best ways to incorporate life insurance into estate plans.

Importance of Life Insurance Beneficiaries

When you list a specific person as a beneficiary on your life insurance policy, funds are disbursed directly to that individual in one lump sum. It does not matter what you may note in your will to the contrary. In fact, payouts can occur fairly quickly and separate from the probate process for the rest of the estate. Thus, keeping beneficiary designations up to date is absolutely critical. Better yet, rather than declaring a specific person as a beneficiary, consider having the funds go into a trust.

Best Ways to Incorporate Life Insurance into Estate Plans

Trusts allow you to maintain control over proceeds from a life insurance policy. You can distribute assets to loved ones in smaller increments over time, under certain conditions, for certain purposes, or any variation thereof. It’s a great way to ensure that assets from your estate last for a long period of time rather than being quickly squandered, especially for younger beneficiaries who may not yet have the life experience or maturity to manage large sums of money. You can create a specific life insurance trust or have proceeds go to any number of other types of trusts.

Other Benefits of Trusts

In addition to maintaining more control over life insurance proceeds, trusts have many other benefits including:

  • Avoiding Probate
  • Shielding Assets from Creditors or Lawsuits
  • Minimizing Estate Taxes
  • Protecting Your Privacy

With all of these features, trusts are one of the best ways to incorporate life insurance into estate plans. With added control over assets, it also gives you peace of mind. The key is selecting the right type of trust for your needs.

Our experienced team of estate planning attorneys can help you create a trust that accomplishes your goals. By taking the time to learn about your life, family, business, and finances, we create a custom plan just for you. Additionally, we help you adapt your plan to important life changes. Contact our team to schedule a consultation and to learn more about other ways to incorporate life insurance into estate plans.