Q. I need to update my beneficiary designations on my life insurance policies at work. I want to name my wife primary. I have two children. Should I name the estate the contingent?
A. You should talk to your attorney about what is right for you. In Pennsylvania, life insurance is not subject to Inheritance Tax and if there is a named beneficiary, it is not subject to probate. However, if you name the estate the beneficiary of your life insurance policy, it will go through the probate process. If you have minor children, I would expect that your attorney discussed providing a Trust for them under the terms of your Will. If this is the case, your attorney can give you the proper wording for the contingent beneficiary designation such that the proceeds of the life insurance would go into trust versus to the estate.
IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advice contained in this communication, including any attachments, is not intended or written to be used, and cannot be used, for the purpose of 1. avoiding penalties under the Internal Revenue Code or 2. promoting, marketing, or recommending to another party any transaction or matter addressed herein.
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