Personal Property
6 min read
Heirs vs. Beneficiaries: Who Inherits a Loved One's Estate?
The distinction between an heir and a beneficiary is particularly important because they may receive estate assets in different ways.
Personal Property
How Life Insurance May Impact Your Estate Planning
Get the legal advice you need without the hourly legal fees
If you are like most people, you probably only have a vague understanding of the purpose that life insurance is supposed to serve. And you may not know that life insurance may impact your estate planning. So when you start thinking about Wills, Trusts, advance directives and more, you may also want to start thinking about life insurance.
What is life insurance?
Life insurance is supposed to protect your family and other loved ones from the hefty financial loss they could face when you pass away. In case you find yourself losing a family member, their life insurance could help provide for their family.A main type of life insurance is a term life insurance policy. A term life insurance policy has no cash value, but offers death benefits for a certain period of time if the policy holder passes away.
What is a life insurance trust?
A trust is a legal document that lets you as the grantor designate a trustee who will manage your beneficiaries’ assets. So when you create a life insurance trust, you give your trustee authority related to the trust. That means your trustee hands out the death benefit funds according to your wishes in your trust. A life insurance trust is handy if your beneficiaries are minors, or if you want them to reach certain milestones in life before they receive the death benefit money.
Is life insurance part of an estate?
Life insurance is normally not directly part of your estate, since it is meant to be payable immediately upon your passing. Unlike the rest of your estate, life insurance death benefits can avoid the probate process by going directly to your beneficiaries after you die.
Why does life insurance matter in estate planning?
Estate planning works by providing for your loved ones after your death. This is also the purpose of life insurance. When you combine the two, your life insurance policy can provide financially for your loved ones immediately after your death.
What happens if life insurance goes to the estate?
Perhaps you have not designated a beneficiary to receive your life insurance death benefits. If that’s the case, your life insurance will go to the estate after you pass away. Now your life insurance funds are part of your estate and subject to the same consequences of probate that the rest of your estate may be subject to. Those whom you have designated in your estate planning documents can eventually receive what’s left of your life insurance benefits, but it can be reduced by expenses and debts of the estate.
LegalShield provides legal access to a provider law firm that is committed to helping you. Your LegalShield provider lawyer can offer consultation, make a phone call, write a letter, review paperwork (starting at up to 15 pages each), and perform other essential legal services to assist with your life insurance and estate planning matters.
Get help with your estate planning questions with LegalShield’s Personal and Family plan.
Get the Answers You Need, When You Need Them
Related articles
Personal Property
6 min read
What Is a Postnuptial Agreement, and How Does It Work?
For many spouses, a postnup is simply about preventing confusion and making shared decisions before money questions get harder to discuss.
Personal Property
6 min read
What Are House Deeds, and How Do I Get Mine?
You might need your deed when you’re selling your home, adding a spouse to the deed, checking ownership, or trying to settle estate questions.
Personal Property
5 min read
Per Stirpes vs. Per Capita: Choosing how your estate gets distributed
The difference between "per stirpes" and "per capita" can be confusing. They sound alike and both have to do with who inherits your assets if a named beneficiary dies. We'll explain the difference.
Personal Property
6 min read
How to Sign as a Power of Attorney Agent to Represent a Loved One
Signing as a POA Agent is more than just jotting down your signature. Banks, title companies, healthcare providers, and similar entities might reject documents if the signature doesn’t clearly show that you’re signing for the other person.
Personal Property
5 min read
How to Avoid Probate With Thoughtful Estate Planning
Probate can take time, add costs, and create extra work for loved ones during an already difficult time. That’s why people often want to know how to avoid it.
