Life insurance policies typically pass outside of probate, which means they may get overlooked or neglected in the estate planning process. Life insurance policies help to supplement the existing estate plans you have and may allow for a more streamlined transition of assets.
If you have a life insurance policy, there is a strong chance that it was put in place in order to help protect your loved ones, if something happened to you unexpectedly.
But in the event that you haven’t coordinated your life insurance policy with the rest of your estate plan, this could create unnecessary problems for your loved ones. For example, maybe you named certain people in your will to receive specific assets that you own, but if you have failed to name contingent or backup beneficiaries in your life insurance policies, these children may not receive the support that you intended.
A common mistake is to name only one child as a beneficiary if that person is to receive their primary benefits through life insurance policy and not the estate. However, in many cases, life insurance beneficiaries have been assigned by the owner of the policy without a bigger consideration about how the remainder of the estate will be divided. This can also become especially problematic in blended family or second marriage situations in which a life insurance beneficiary was never updated after a divorce.
Consider this as a reminder to update your life insurance beneficiaries on a regular basis and to get support from an experienced estate planning attorney to coordinate your entire plan. A lawyer can help you discuss the ways to coordinate your life insurance policy with the rest of your estate plan. Contact our Pasadena estate planning office to discuss your options.