I like how Massachusetts Divorce and Wills Lawyer Blog wrote (Almost) All About Life Insurance:
First, the beneficiary designation of your life insurance is very important. If it is a large policy, for tax reasons, you might want to consider having the beneficiary of the life insurance be a trust that you set up instead of your wife or children.
Second, if you name your children as the beneficiaries, remember that minor children cannot inherit money outright. Besides, if you had a million dollar life insurance policy, do you really want your 10-year old child to carry around a million dollars with them, to spend as they wish? Didn’t think so.
Third, if you’re thinking about buying life insurance, in addition to speaking with a financial advisor, speak with an estate planning attorney as well. For estate tax purposes, sometimes it is better to have life insurance bought a certain way by either your spouse or a trust, then to buy and insure yourself. If you don’t have a will and estate plan, when you think of buying life insurance, it’s a very good time to consult with an estate planning attorney and simply have everything set up all at once. It’ll save you and/or your loved ones a lot of grief and heartache down the road
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3 comments:
Consulting a professional is the way to go but be sure you're prepared to speak their language. I recently picked up a book called Die$mart by Kathy Lane. It has really helped me to think about the details of my estate plan and prepare intelligent questions that pertain to my situation. I never realized how complex the laws surrounding managing and transferring assets have become. There were several areas where I learned how vulnerable we were and how our wishes or assets might be treated differently than we had thought.
You cannot stress enough the importance of estate planning.
And maybe someone will pay attention before the crisis wherein they will be paying me to clean up a mess that could have been avoided.
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