New York Estate Planning Has Benefits and Pitfalls From Life Insurance

New York estate planning requires the consideration of many different facts and circumstances. Paramount in importance is a person’s planning desires which require identifying the beneficiaries, such as relatives, friends and charities, who are to share in the plan. Also, the various types of assets such as real estate , securities, retirement funds and bank accounts must be examined. One such asset that is very popular and helpful in planning is life insurance.

Life insurance is a contract between the owner or person who buys the policy and the insurance company. The contract or policy obligates the company to pay a certain amount of money upon the occurrence of a certain event such as the death of the person who is insured. Depending upon factors such as age, health and type of policy, the ultimate insurance pay-out may be many times greater than the premiums paid to purchase the insurance. Therefore, when contemplating the use of life insurance as part of an estate plan, an individual should consult with experienced professionals such as a New York estate planning attorney and a qualified insurance agent or financial planner.

In addition to determining the appropriate type and amount of insurance to purchase, close attention should be given to the naming of primary and alternate beneficiaries. Designated beneficiaries of insurance receive these benefits outside of a probate estate. Thus, the provisions of a Last Will must be coordinated with the naming of the insurance beneficiaries to preserve the intentions of the estate plan pay-out.

Due diligence in investigating the bona-fides of the insurance company is also advisable. In a recent post by Philip Moeller on May 2, 2011 in The Best Life, it was reported that many insurance company practices are being investigated relating to life insurance policies. The article noted an audit by the California State controller that showed “an industry-wide practice of companies failing to pay death benefits to the beneficiaries of life insurance policies.”

The article also provided a number of suggestions that one should follow regarding their life insurance policies, which are summarized as follows: (i) clearly identify your beneficiaries; (ii) maintain good records of the insurance; (iii) advise your beneficiary concerning the insurance; and (iv) use the assistance of an attorney or financial planner who can assist with the collection of insurance proceeds.

New York City estate attorney Jules Martin Haas, Esq. has been representing clients in Probate and Estate Administration proceedings throughout the past 30 years. If you or someone you know is involved with or has questions about a Last Will or other aspects of Probate or Estate Administration, please contact me at (212) 355-2575 for an initial consultation.

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