Can I make my estate the benficiary of my life insurance?

Question

I have about $800,000 in life insurance. I am divorced and have some other assets as well. My will is set-up that my five children each get 20%, plus their mother and my mother get some cash.

Can I just make my "estate" the beneficiary of my life insurance after my death, and then those funds will just be part of all the assets to be allocated?

If so, is there any special language I need to use on the Beneficiary Designation form?

Thank you.

Answer 1

You can make the estate the beneficiary. But, check out the tax implications for the beneficiaries of your estate. Tax laws change quite a bit and based on $800,000 plus the estate, they may end up paying taxes. Life insurance proceeds directly to them would not be a tax event!

Answer 2

Yes, but it would be a dumb thing to do.

Direct to beneficiary--- payable within a few days and no tax implication, or lawyer;s fees.

Payable to estate--- iti become part of the estate-- payable in a year or more, mabye two or three, as soon as the estate

has been settled, possible tax implications and probable attorney's fees.

Answer 3

I'll reiterate what some of the others said and hopefully add something.  

If you name your five children the beneficiaries on the policy they will get a tax free check for 20% of the face amount.  Done deal.  

If you pay it to your estate there may be estate tax implications like some of the others mentioned. Also if you die with debts then creditors will probably be inline for the assets in your estate before your children.  If you ended up dying with huge medical bills, then the estate would have to settle up the medical bills before it paid out to your heirs.

Answer 4

Not a good idea.  The insurance proceeds then have to go through probate and possibly be taxed.  Name your beneficiaries directly - you can have multiple beneficiaries and designate the percentage for each.

Answer 5

Yes, Just put estate of insured

Answer 6

As the others have stated, your best interest for your children to receive the monies is to list them as the beneficiaries, not the estate.  

You can list them one by one, with each getting 20%, or if you want to include your mother and their mother you can split it by percentage or dollar amounts... Son #1 gets $100 thousand, Mother gets $50 thousand, Wife gets $15 thousand, etcetera.

Anytime you list the estate as the beneficiary, as the other posters here have stated, it can take a long time to get the money to your heirs and it will be attacked by creditors and hospitals first, years could go by before your heirs see money.  If they are listed as the beneficiaries they could see money within 2 weeks depending on the insurance company.