Benefits

• Succession planning ensures that your life insurance proceeds are received by individuals whom you know and care about, or to a charity that you believe in. The proceeds of your insurance policy can be paid in a lump sum or in periodic payments, giving you control over how your death benefit is paid after you die.
  
  

Effects

• You avoid probate when naming beneficiaries and properly allocating your death benefit. Because of this, more of your estate can pass to your heirs in tact, avoiding costly lawyer's fees and possibly avoiding estate taxes if you use an irrevocable life insurance trust to disperse death benefit proceeds.
  
  

Warning

• You may substantially increase the size of your estate without using an irrevocable trust. You may also unintentionally disinherit your heirs if your life significantly changes and you do not update your succession plans. For example, if you get a divorce, you will want to be sure to alter your life insurance beneficiary designations to reflect the fact that you are no longer married. otherwise, your ex-spouse may receive death benefits that you don't want her to receive.