Wiener and Wiener LLP
With Offices In Allentown And West Palm Beach, We Serve Throughout Eastern Pennsylvania And Florida

Don’t fall victim to this common insurance estate mistake

On Behalf of | Sep 14, 2022 | Estate Planning |

Your life insurance policy could play a major role in your estate plan, but the way that you handle the policy and its proceeds could impact the legacy you leave when you die. Although you may think you have properly addressed your life insurance policy in your estate plan, you could leave behind a major mess if your documents aren’t in total agreement.

If you want your term life policy to fund a special needs trust or to cover the cost of your remaining debts when you die, you likely have very specific plans for the payout your family will receive from your insurance after your death. Making these plans clear to your family members and the individual who will serve as the executor of your estate will help reduce the chance of disagreements and conflicts stemming from your last wishes.

In some, rare cases, mistakes in how you allocate your insurance proceeds could alter the impact of your estate on the people that you love. If you have integrated your life insurance policy into a comprehensive estate plan, it is of the utmost importance that you don’t make this very common mistake.

Conflicts between documents can undermine your plans

It is common for people to name a beneficiary for their life insurance policy when they first purchase their coverage. They may then fail to revisit those documents even when updating other parts of their plans.

You might talk about your life insurance in your estate plan without ever going back to update your actual policy documents. Unfortunately, this lack of coordination between documents could lead to a conflict. When your estate documents and insurance documents contradict each other, it will be the insurance paperwork that ultimately determines who will receive the proceeds from your insurance policy.

How do you prevent insurance issues?

The simplest way to avoid a scenario where your insurance proceeds end up going to your ex-spouse or another party other than your current intended beneficiary is to make a point of checking your insurance documents anytime you update your estate plan. By ensuring that both sets of documents contain the same information, you will avoid the possibility of conflicts between people who have different expectations for your estate.

Identifying and avoiding common estate planning mistakes will help you retain full control over your legacy.