Estate Planning 101: Keeping Control of Your Life Insurance
Life insurance is an essential part of planning for the future of your loved ones. Most people purchase life insurance at a fairly young age when they are starting their family. It is an affordable way to ensure your loved ones have the money they need to live should you pass away unexpectedly. While buying a good life insurance policy is an important first step, it isn’t the only thing that you should do. Simply having a policy in place isn’t enough to ensure your loved ones are protected.
Protecting Loved Ones After You’re Gone
When you create a life insurance policy you will have to name one or more people as the beneficiary. If you simply list one person to receive the money, you won’t have much control over how it is used. It also opens up the possibility of many problems, such as:
- The beneficiary dies before or at the same time as you.
- Your relationship with the beneficiary changes (divorce, etc)
- The beneficiary becomes incapacitated
There are many different situations that can arise, which is why simply listing someone as the beneficiary is insufficient. Even if your beneficiary is physically healthy at your death, you will likely want to make sure that the money from your life insurance policy is according to your wishes, especially if you have minor children. If, for example, you have young children and you pass away, you will undoubtedly want the money to be used to care for them. If your wife, however, decides to remarry after a while, that money may be used for her new husband’s desires as well. Fortunately, there are things that can be done to ensure the money is used as you would want.
Planning How Your Life Insurance Policy will be Used
Legal trusts are among the most common estate planning documents, and are used to ensure certain assets are used according to your wishes when you are gone. You can have a trust named as the beneficiary of your life insurance policy, and then direct how that money will be used for years to come. Your trust can, for example, state that your spouse gets a set amount of money each year to care for the children, another amount is set aside for your children’s college expenses, and that the remainder be paid out to your children upon their 25th birthday.
Establishing Your Trust
Establishing a legal trust isn’t difficult or expensive, but will provide you with great peace of mind. We can help get your trust set up so you can be certain that your life insurance policy will be used according to your wishes. To get started, please contact us to schedule a consultation today.