Can a life insurance policy be a substitute for a Florida will?

| Jul 26, 2019 | Wills & Trusts

Estate planning is both a simple and complex thing. It is not difficult to sit down with a Brevard County attorney and create a will. But because Florida law is complex, it takes study and experience to know which estate planning tools should be used to protect you, your assets and your loved ones in ways that a will cannot.

People sometimes hope that minimal steps they have taken can be effective substitutes for writing a will, creating a revocable trust, health care power of attorney or other crucial estate planning documents.

We have had people ask if a life insurance policy can be a substitute for a will. Unfortunately, assuming that the policy will take care of estate planning needs is an all-too-common mistake. In reality, a life insurance policy is a single form of property. While it might leave a substantial asset to a loved one, it has no bearing on other assets.

That said, if your policy is payable to a particular person, a will won’t have any effect on that payment. And if the policy is payable to your estate, you would want to have a will to direct distribution of those funds to a spouse, children, favorite charity, etc.

It should also be noted that if you make a mistake in designating a beneficiary of the policy, it can have significant estate tax consequences.

The best course of action is to talk about the policy, your will and your wishes with an estate planning attorney.

The same advice applies to those who believe that because they have established a trust, they do not need a will or need to update their will. The problem here can be that a person overlooks the fact that a trust deals only with the property placed into it. Anything left out will not be controlled by the trust.

Talk to a trusted Cocoa estate planning lawyer about the options available that can protect you and those you care about most.