How does life insurance fit into your estate plan? 

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How does life insurance fit into your estate plan? 

On Behalf of | May 21, 2021 | estate administration & probate

Life insurance can be a very valuable asset. If you’ve purchased a plan, it may be the main way that you leave money to your heirs — whether your goal is to help them cover the costs of your own passing or just to give them a nice inheritance at the time. 

But how does this fit into your overall estate plan? There are a few things that you should know. 

Your will and your beneficiary designations are not equal

First and foremost, you must remember that your life insurance policy will not be distributed according to your will. It will use the beneficiary designations that you set in place. If there is a difference between the two, those designations take precedence. Your will does not. 

Secondly, to help get around this, you don’t need to name a person as your beneficiary at all. You could name a trust. The money from the policy will then go into that trust upon your passing. 

There are a lot of benefits to doing this, but one of the main ones is simply that you can make stipulations in the trust for how the money is distributed and used. This gives you more control. You may want that with a substantial policy, rather than giving all of the money to your heirs directly. It all depends on your goals. 

Getting started with your estate plan

As you can see, estate planning can get fairly complex. Make sure you are well aware of all of the options you have to accomplish your goals. Working with an experienced advocate can help you uncover hidden options and address potential problems long before anything becomes a critical issue. 

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