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The needs and goals of each person’s estate are unique and should be assessed by an attorney. However, in many cases, an estate plan should be modified if I named my children as beneficiaries of my life insurance policy. Purchasing the policy or naming the child as the beneficiary after you set up your estate plan could defeat the purpose of many of your other estate planning tools.

Following are three examples as to why this is the case:

  1. If a minor is named beneficiary of a life insurance policy, a guardian may need to be appointed by the probate court so that payments can be made. This will likely defeat the purpose of setting up an estate plan that allows for a smooth and efficient transfer of assets to your loved ones without the need for court oversight.
  2. A child that is named as the beneficiary of a life insurance policy may not be mentally or emotionally mature enough to handle such a large distribution of assets. Life insurance policies are not replacements for living trusts. As such, the payout will be one or more large lump sums. This may be contrary to the strategy that you have set up for the rest of your assets, wherein you give a trustee control over the assets until a time that you feel is appropriate for your child to be in control.
  3. Payouts from insurance policies that name your child as a beneficiary will not impose restrictions over the use of the assets. This may not be in line with your estate-planning goals. For example, if you wanted your assets to remain in trust while your child completes college or graduate school, you should modify your estate plan to utilize the trust in conjunction with your life insurance policy.

If I named my children as beneficiaries of my life insurance policy? Following are three reasons why you should consider updating your estate plan. In addition to these three examples, there are several other reasons why your estate plan should be updated periodically. To learn more estate plan modifications and the use of insurance as part of an estate plan, sign up for our free newsletter today.

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Due to the CoVid19 virus California has issued a Stay-at-Home order. We understand how important the health and safety of our clients, and our staff is. We are complying with this order by continuing to work from our homes. While we are not in the office, we are still here to answer your questions, conducting consultations for review, and initial appointments by phone and email during normal business hours. We know that in this time, more than ever, it is important to have peace of mind about your estate planning. We are here to help you through this. Call our office number or email us and we will respond as quickly as possible.