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Careful how you name life insurance beneficiaries

Life insurance might seem like a very easy thing. You buy life insurance in case of an unexpected death, and you name beneficiaries. It is just that simple, right? The answer might depend on who you name as your beneficiary. Although many people can name whomever they would like as their beneficiary, there are some things that people should be cautious of.

For example, people cannot name their minor children as beneficiaries. There might be ways that the beneficiary could be a trust the benefits a child, however. Speaking with an experienced estate planning attorney can help ensure that all proper documents are in place to honor a person's wishes.

Sometimes people don't want their children to lose Supplemental Security Income if they ever inherit a life insurance policy. People might not think that they could lose government benefits, but if the inheritance amount is large enough, they could lose benefits.

People also sometimes try to keep these policies secret. While these matters should be decided on an individual basis, many people can benefit from sharing some information on the existence of a life insurance policy with their family or those who are beneficiaries. That way they understand that a policy exists and they might understand who was included and why.

An experienced attorney can help make sure all estate planning documents work together to honor a person's wishes. Revisiting an estate plan frequently can also help a person adjust for any changes in relationships or if a beneficiary dies.

Source: Fox Business, “Naming Life Insurance Beneficiaries: 10 Ways to Screw up,” Barbara Marquand, May 22, 2013

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