I have enough life insurance, why would I need a Will?
Life insurance benefits are paid directly to the named beneficiary. If minor children are named as beneficiaries or contingent beneficiaries, the proceeds will go directly to the children. Minors, however, do not have the legal capacity to hold the money in most cases. This means that a conservator will need to be appointed at a significant cost and hassle, and then the children will gain full access to the money at age 18; an age which may lead to reckless spending and a waste of the money. To avoid this hassle, a trust could be established by a Will to benefit the minor children.
A common mistake that people make regarding life insurance is that when someone gets divorced, they do not name a new beneficiary on their life insurance policy, meaning the ex-spouse gets all the proceeds. Part of estate planning after a divorce involves updating beneficiaries on life insurance, retirement accounts, and other financial assets.
Another consideration regarding life insurance is that a life insurance policy may be kept out of a gross estate for estate tax purposes if structured properly. It is a common mistake to include life insurance benefits in the gross estate for estate tax purposes because the decedent maintained an incidence of ownership in the policy or because the contingent beneficiary is the estate. If your estate, including life insurance benefits, is large enough to create an estate tax, it is worth consulting an estate planning expert to determine if an irrevocable life insurance trust, or other planning technique to minimize your estate tax burden would achieve your desired results. [O.C.G.A. § 33-25-11]