If you have paid life insurance premiums for years, the last thing you want to happen is for the insurance company to receive a windfall after your death instead of paying out to your beneficiaries. However, if your beneficiaries do not know about the policy, they will not know to make a claim. For this reason, part of your estate plan should include some way of letting your beneficiaries know about your life insurance policy.

New York’s Department of Financial Services strongly encourages insurers to check their unpaid premiums databases against the Social Security Administration’s records in an attempt to find unclaimed life insurance benefits that should be paid out. However, it might take months or even years for the insurance company to notice that you have passed away and that it needs to locate your beneficiaries. In the meantime, your spouse and children will not have the benefit of the life insurance policy you paid for.

You should reference all of your life insurance policies somewhere in your overall estate plan documents so that the people who need to know can tell your beneficiaries where to make a claim. It is also a good idea to store the policy information in the same place that you keep your other estate plan documents. At a minimum, make sure that your will’s executor will know about the life insurance policies as quickly as possible.

Davidov Law Group is a member of the American Academy of Estate Planning Attorneys.

If you’re not careful, life insurance (and other beneficiary designation assets) can become a probate asset.  And, that’s not good.

Beneficiary designation assets are contracts wherein you have the opportunity to name an individual(s) or trust(s) to receive your assets when you die.  Beneficiary designations assets include life insurance, retirement accounts, and annuities.  Some bank accounts have beneficiaries, as well.

Beneficiary designation assets usually avoid probate.  And, that’s a good thing.

Probate is a big hassle and everyone and anyone can know your business with a trip to the courthouse or a click online.  This means that predators and nosey neighbors, friends, and relatives can look up what assets you owned at your death, what debts you owed at your death, who your beneficiaries were, and who your executor was.

Why is publicity a bad thing?  Most folks like to keep their financial and family business private.  In addition, predators such as greedy relatives and friends and conmen such as unscrupulous clergy, financial advisors, and charities may inundate your beneficiaries with requests.

In addition, probate is expensive, time consuming, and a hassle.  It is to be avoided.  You can easily keep your life insurance (and other beneficiary designation assets) from going through probate.

The key is to name an individual(s) or trust(s) as the beneficiary of your life insurance.  If you name your estate as the beneficiary or fail to name a beneficiary at all, the assets will flow into your estate.  If the assets are in your estate, probate is triggered.

Be sure to review your beneficiary designations now and each time you have your estate plan professionally reviewed.  Reviews are necessary every three to five years.

If you have questions about how to fill out your beneficiary designation form for your life insurance, consult with a qualified estate planning attorney.

Davidov Law Group is a member of the American Academy of Estate Planning Attorneys.

When you are involved in a business partnership and you are planning your estate, you have to consider the matter of succession. Your share in the business may well be one of your most significant assets. But when you pass on, how is your share carved out and passed along to your heirs without negatively impacting your partners and the viability of the business? This may sound rather challenging, there is a rather simple and elegant solution available in the form of the buy-sell agreement.

These agreements can be used to facilitate succession due to retirement, disability, or a voluntary exit for any reason, but they can also be used in estate planning. If you are the co-owner of a small business, when you pass away you will invariably bequeath your share to your heirs. What can they logically do with it? One or more of your family members could possibly assume your ownership role, or they could sell your share to the higher bidder.

These possibilities are usually not going to resonate well with the surviving partners, and depending on the circumstances, your family would probably prefer not to have to try to find a buyer or attempt to fill your shoes as a co-owner. The way that a buy-sell agreement can satisfy both parties is through the purchase of life insurance. Each partner in the business takes out a policy on the life of every other. Should you pass away, the policy proceeds are used to buy your share from your heirs. This is called a cross-purchase plan, and the other most common buy-sell mechanism is the entity plan. To implement this approach, the business entity itself purchases life insurance on each of the co-owners, and when one of them passes away the proceeds are used to buy the deceased partner’s share from his or her family.

Davidov Law Group is a member of the American Academy of Estate Planning Attorneys.