• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer

Sexton, Bailey Attorneys, PA

SEXTON BAILEY ATTORNEYS, PA an Arkansas Estate Planning & Trust Information Center

Sexton, Bailey Attorneys, PANorthwest Arkansas Estate Planning Attorneys(479) 443-0062

Client Vault
  • Home
  • Our Firm
    • Our Firm
    • About the American Academy
    • Advantages of Working With Our Firm
    • Attorney and Staff Profiles
    • News & Events
    • Our Reviews
    • Speaker Connection
  • Estate Planning
    • Asset Protection & Business Planning
    • Elder Law & Medicaid Services
    • Estate and Gift Tax Figures
    • Estate Planning Services
    • Family-Owned Businesses & Farms
    • Incapacity Planning
    • Legacy Planning
    • Pet Planning
    • SECURE Act
    • Special Needs Planning
    • Trust Administration & Probate
  • Webinars
  • Practice Areas
  • Resources
    • DocuBank
    • Elder Law Reports
    • Estate Planning Resources
      • Estate Planning Articles
      • Estate Planning Checkup
      • Estate Planning Definitions
      • Estate Planning Reports
      • Incapacity Planning Definitions
      • Is Your Estate Plan Outdated?
      • Top 10 Estate and Legacy Planning Techniques
    • FREQUENTLY ASKED QUESTIONS
      • Estate Planning
      • Frequently Asked Questions for Families Without an Estate Plan
      • Legacy Wealth Planning
      • Medicaid Planning
      • Pet Planning
      • Trust Administration & Probate
    • Newsletters
    • Trust Administration & Probate Resources
      • Bereavement Resources
      • How to Know if You Need Extra Help With Your Grieving
      • Loss of a Loved One
      • The Mourner’s Bill of Rights
      • Things You Need To Do When a Loved One Passes Away With a Trust
      • Things You Need To Do When a Loved One Passes Away With a Will
      • Trust Administration & Probate Definitions
  • Reviews
    • Our Reviews
    • Review Us
  • Contact Us
  • Blog
Home / Fiduciaries / Take Extra Care When Choosing Insurance Beneficiaries

Take Extra Care When Choosing Insurance Beneficiaries

July 19, 2013 by Audra Bailey Wilcox Leave a Comment

Life insurance can be an important part of an estate planning program.  But it is also easy to make mistakes when naming beneficiaries that can create problems for the rest of the plan.  And when these mistakes happen, the problems usually become those of the ones left behind after your death.

One of the most common problems is the failure to update beneficiaries as life events happen – marriage, divorce, remarriage, births, deaths, etc.  Not paying attention to these events may result in your ex-spouse getting more insurance proceeds than your current spouse gets through your estate – probably not what you intended.

But other issues may arise as well.  If you are not married, you may think that making your child your insurance beneficiary is the best route.  But if your child is still a minor when you die, he or she cannot directly receive the money.  It must be managed by an adult.  And if you haven’t made that designation, a guardian will be appointed by the court to handle the funds with two results: (1) the court process can be costly and (2) someone you might not have picked will be controlling the money.

Similarly, if the beneficiary you name is receiving some form of government benefits when you die, the proceeds from your insurance could actually cause the beneficiary to lose some or all of those benefits.  A disabled child or a parent or older sibling receiving Medicaid or Social Security could be disqualified when his or her net worth increases.  While it is certainly not  a bad idea to leave money to supplement the needs of these loved ones, consider setting up a trust or other means of managing the proceeds without it affecting the other benefits of the beneficiary.

The problem with naming beneficiaries is not so much “who” as “how” – name the person that you think will benefit most from the proceeds but make sure that the proceeds are distributed in a way that helps and not harms them.   An estate planning attorney will be able to help you choose the best routes to benefit your loved ones.

  • Author
  • Recent Posts
Audra Bailey Wilcox
Audra Bailey Wilcox
Attorney at Sexton, Bailey Attorneys, PA
Audra Bailey Wilcox
Latest posts by Audra Bailey Wilcox (see all)
  • Bill Nye the Science Guy on Wearing Masks in Public - July 11, 2020
  • Low-Interest Loans: An Estate Planning Technique - June 23, 2020
  • Irrevocable Medicaid Trusts - June 16, 2020

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Sexton, Bailey Attorneys, PA

Is Your Plan Outdated?

Subscribe to Our Blog

Office Address

Fayetteville
2766 Millenium Drive
Fayetteville, AR 72703
Phone: (479) 443-0062

Office Address

Prairie Grove
1100 Division Street, Suite 4
Prairie Grove, AR 72753
Phone: (479) 846-6026

Office Address

Farmington
6 West Main
Farmington, AR 72730
Phone: (479) 267-4441

Office Hours

Monday9:00 AM - 5:00 PM
Tuesday9:00 AM - 5:00 PM
Wednesday9:00 AM - 5:00 PM
Thursday9:00 AM - 5:00 PM
Friday9:00 AM - 12:00 PM

Map

map for office
  • Facebook
  • LinkedIn
  • RSS
  • Twitter
  • YouTube

footer-logo

© 2021 American Academy of Estate Planning Attorneys, Inc.