3 Major Mistakes To Avoid When Naming Your Life Insurance Beneficiary
Your life insurance policy can, and should, go to the person you would like to give it to. But, there are certain mistakes that, if made, can make it much more difficult for your life insurance policy to go to the right person.
Going over the three major mistakes to avoid when naming your life insurance beneficiary, and speaking with a lawyer at the Millhorn Elder Law Planning Group, will allow you to give your life insurance policy to the right person.
Mistake 01: Selecting A Minor To Be Your Beneficiary
A minor can receive a life insurance policy. But, this is only true, in the state of Florida, if the overall funds comprising this policy are less than $15,000.
The above is equally true of other assets; a minor can receive the assets you wish to give them, but these assets cannot exceed an overall value of $15,000.
If you do select a minor to be the beneficiary of your life insurance policy, and this policy is worth more than $15,000, then they will be distributed to a court-appointed guardian who will manage the funds for a fee.
To bypass this, you can select a grown adult to be your beneficiary. Or, you can set up a trust that allows the minor you choose to receive the funds when they are grown.
Mistake 02: Forgetting To Update Your Beneficiary
You may have your life insurance policy for quite some time. And, during this time, your life may change; people may pass away, circumstances shift, relationships evolve.
If you forget to update your beneficiary, there is a chance that the wrong person will receive your life insurance policy. By updating the beneficiary, though, when necessary, your policy will go to the right person.
Mistake 03: Not Naming A Beneficiary
Out of all the mistakes that can be made, when naming your life insurance beneficiary, never actually naming a beneficiary may be the most problematic.
If you fail to name a beneficiary, your life insurance policy will go through probate. By going through probate, a judge will be allowed to determine who your policy goes to, which may not be what you would like.
Outside of letting a judge choose who your life insurance policy goes to, probate will lead to your policy being stuck in court for a period of time, while also allowing those funds to be used to pay for probate.
None of the above is remotely desirable, especially if you would like to give your life insurance policy to someone specific. But, fortunately, the entire situation can be avoided with relative ease: select a beneficiary you would like to give your policy to, upon your passing, and then develop a trust that incorporates the police.
Speak With A Florida Estate Planning Lawyer Today
A good estate plan will allow your life insurance policy to go to the person whom you like to give it to. Speak with a Florida estate planning lawyer today and we will help you develop an effective estate plan.
Sources:
leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0700-0799/0710/0710.html
law.cornell.edu/wex/trust
