If no beneficiaries are declared in a life insurance policy, the benefits are paid to the estate of the deceased for distribution to survivors. Survivors may include a spouse, child, parent, brother, or sister.

If no beneficiary is living at the death of the insured member, the benefits are again paid to the estate for handling by the duly qualified executors or administrators of the estate.

If there are no survivors and the will of the deceased does not specific how assets are to be distributed, then the probate court will handle disposition in accordance with state law.

Naming a beneficiary is important for your wishes to be carried out exactly.

• Language to determine beneficiaries is extremely important. The exact terminology is important. If the situation involves blended families, your desires can be confused with terminology such as “my children” or “my wife.” Be specific.
  
• As your circumstances change with time, periodically check to make sure the beneficiaries are correct.

IRREVOCABLE TRUST AS BENEFICIARY

When a large estate is involved, the goal may be to reduce estate taxes. One way to reduce the taxable estate is to establish an irrevocable trust. Specific instructions are given to how your assets are used after your death. The trust becomes both the owner and the beneficiary of a life insurance policy. It is common to make annual gifts to the trust to fund the payment of premiums each year.
The tax savings can be considerable. The negative is that once the trust is formed, changes are not possible.

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