How should insurance benefits be handled by an estate? 4 Answers as of April 01, 2011

Should life insurance benefits be paid directly to the estate, then disbursed as the will dictates, or does paying directly to the beneficiaries shelter the insurance money from any creditors when it is time to settle last expenses from the estate?

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Theodore W. Robinson, P.C.
Theodore W. Robinson, P.C. | Theodore W. Robinson
By paying the insurance proceeds through the estate, you will probably subject them to estate tax. However, you should consult with an attorney because there may be enough of an exemption available that it won't matter much either way you choose. Your other point about sheltering insurance proceeds from creditors is accurate. Those are bothsound reasons for simply directing the insurance proceeds directly to whomsoever you wish to have it. Good luck.
Answer Applies to: New York
Replied: 4/1/2011
Burnham & Associates
Burnham & Associates | Stephanie K. Burnham
Paying life insurance benefits directly to beneficiaries can shelter the insurance from the debts of the estate and avoid delay and probate costs for insurance. There may be reasons why you do not want to pay the benefits directly to a beneficiary like age, maturity or beneficiary creditors. If this is the case you should talk to an attorney about using a Trust to protect the insurance proceeds and pass the proceeds free of probate.
Answer Applies to: New Hampshire
Replied: 4/1/2011
Apple Law Firm PLLC
Apple Law Firm PLLC | David Goldman
While paying them directly to the beneficiaries generally shelters them from the creditors of the estate, it can subject them to the creditors of the beneficiaries. You should discuss the options with Florida Estate Planning Lawyer to determine which is best for you and your beneficiaries given your current and likely future situation.
Answer Applies to: Florida
Replied: 3/30/2011
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