There are generally two ways that a life insurance policy could become payable to the estate of a deceased person. The first is if a person actively names their estate as the beneficiary. The second is if no named beneficiary is alive to receive it. In either case a probate will likely be the result!
ACTIVELY NAMING YOUR ESTATE AS BENEFICIARY
I have been an estate planning since 1994 and I really can’t think of a great reason to name your estate as the beneficiary of a life insurance policy. The only thing I can imagine would be the beneficiary you want to provide the policy to is a minor and you don’t have time or money to properly prepare an estate plan. Some policies have default provisions for beneficiaries if one isn’t named. Thus, if you fail to name any benef
So often people create wills and trusts without thinking about who is named beneficiary on their life insurance, IRA, 401ks, annuities, and other payable on death assets. It’s so very important for many reasons including:
- You may have former spouses named;
- You may have had more kids;
- Companies lose the forms;
- You may never have completed a form;
Plus keep in mind the default provisions for these assets can be widely different. Some pay to the decedent’s estate which means a big probate. Others may pay to a set person (i.e. your spouse or your children) and that might not be your desire.
Check your beneficiary designations and make sure they are right!