A "Better" Guide to Estate Plan Funding, Part 10: Life Insurance

Exploring concerns with the structuring of ownership, beneficiary designations, and trusts

While the bulk of this series is exclusive for subscribers, I have made the videos and slides for all 10 parts available for purchase for $150. You can access them by clicking here: https://griffinbridgers.gumroad.com/l/nkzhup Note that this purchase provides one license per user, and the materials are not intended for sharing or distribution. By purchasing you consent to these terms.

Table of Contents

1. Intro

2. Video

3. Slides

4. Key Takeaways

Intro

In the prior installment of this series, we discussed some (often convoluted) tax rules surrounding beneficiary designations for IRAs and qualified plans. While in some cases the beneficiary designations for life insurance policies are easier conceptually, there are some other concerns and pitfalls that must be addressed.

For example, there is often a question between naming individual beneficiaries, versus naming trusts. Sometimes, it seems easy to avoid estate tax issues by changing ownership of the policy to someone other than the insured. And, I have frequently seen practitioners advocate for the designation of the estate as beneficiary.

But, there are pitfalls to these and other common approaches. Estate planning documents that deal with life insurance - in particular revocable and irrevocable trusts, and sometimes wills - have special drafting concerns that are not addressed in many form estate planning documents. Liquidity needs of the estate, versus needs of beneficiaries, may be at odds creating tensions with this sort of planning. This video, the accompanying slides, and the key takeaways at the bottom address many of these concerns while highlighting some fairly simple changes that will turbocharge life insurance in the estate plan.

Video