Continuing our list of the top 10 mistakes to avoid with your life insurance beneficiary designations:
6. Make sure to update as needed
Life changes, and it can change often. We recommend reviewing your policy regularly (every 1-2 years) to ensure that it is current. Also, if you know of changes you wish to make, do not delay. This is especially important after a divorce, marriage, death, birth…etc.
7. Pay attention to the details
To help ensure that the proceeds from your life insurance policy are distributed correctly, make certain you are specific. Give detailed information on the beneficiary, such as full name, address and even social security number, so the company can be certain that they give the funds to the right person(s). This will help to avoid confusion, delay and errors.
8. Do not keep it a secret
Make certain that your loved ones know that you have a life insurance policy and that they know where to find it. There are many proceeds that were never claimed simply because family members never knew there was a policy. Don’t let this happen to you! And, while we’re on the subject, make sure they know about your estate planning documents, healthcare documents and any other vital legal documents as well! Being organized with these files will help your loved ones during a time of crisis and loss.
9. Make sure to set conditions as needed
If you have listed young adults to receive your funds, be wary. Many individuals, especially young adults, can be reckless with a large inheritance. Most parents would worry about their 18 year old receiving a large payout and whether they would use the funds responsibly. A way to avoid this is to create a living trust and to set guidelines for the receipt of the money. You can dictate that the funds go in segments, or can even say that certain achievements must be attained to receive portions of the inheritance (such as a college degree, maintaining a steady job, purchasing a home…etc). This helps you to provide control over the assets and help guide your loved ones to make the most of their inheritance.
10. Don’t forget to name additional beneficiaries
Unless you name your trust as your beneficiary, you should have more than one beneficiary listed on your life insurance policy. (Even in your trust you create back-up beneficiaries) If you fail to list a beneficiary, or if the listed beneficiary has passed away, then the proceeds will go into the overall estate and will have to go through probate. Those funds are no longer protected and, because of the probate process, can be used to pay off creditors. Plus, your beneficiaries will now have to face long delays and the high cost of probate. So make certain that you name multiple beneficiaries to ensure that your life insurance policy passes to your loved ones smoothly.
If you have questions or would like more information, contact our office today at 888.222.1328. We also provide free consultations and would be happy to meet with you to discuss your estate planning needs.
What the Attorneys of Morris Hall Can Do For You:
The attorneys at Morris Hall have 100’s of years of combined experience ensuring that families’ assets are protected from probate, unnecessary taxes, creditors, ex-spouses and Medicaid spend-down. The attorneys also help those in Arizona and New Mexico to apply for and receive Medicaid assistance and Veterans Benefits. Our Arizona offices are located in Phoenix, Mesa, Scottsdale, Cave Creek, Tucson, Prescott, Flagstaff and Arrowhead. Our New Mexico offices are located in Albuquerque, Las Cruces and Santa Fe. Contact us today at 888.222.1328 to schedule an appointment!
This blog should be used for informational purposes only. It does not create an attorney-client relationship with any reader and should not be construed as legal advice. If you need legal advice, please contact an attorney in your community who can assess the specifics of your situation.
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