What Is Life Insurance?
You can think of life insurance like car insurance – an insurance company offers to pay money if something bad happens, in exchange for your commitment to make monthly premium payments. If you pass away unexpectedly, the life insurance company will pay your beneficiary or beneficiaries of choice a lump sum of money.
What Is a Will?
A will explains how you want all of your property and money distributed after your death. Wills can list very specific gifts, such as a set amount of money to a particular person, or they can simply give percentages of assets to certain people. In addition, many people include last wishes in their wills, such as desires for funeral arrangements. A will should specify an executor who assembles and distributes the assets to the heirs.
Why Do You Need a Will in Addition to Life Insurance?
Life insurance does not distribute the money that is in your estate. Your estate includes all personal property, real estate, cash, stocks, and other items that you own. In contrast, life insurance money comes from an insurance company.
If you have only life insurance, your estate will be distributed to relatives by intestate succession. This is a specific order of relatives who get portions of the estate. Usually, your spouse and children inherit first. If you are already leaving life insurance proceeds to some relatives, then you may not want to leave them anything else from your estate. However, the principal of intestate succession may lead to them inheriting anyway.
In other words, life insurance is very useful, but it is not a substitute for deciding how you want your estate distributed. Talk to an estate planning lawyer about making a will. You may need other estate planning structures in place as well.
Planning your estate? Look to Janet Brewer, Esq. for thorough and thoughtful estate planning advice. Janet’s more than 20 years of legal experience will give you confidence and peace of mind. To schedule a “Get Acquainted” meeting, visit Janet's website or call her office at (650) 469-8206.