Can you leave life insurance in a will?

[theeverydaydancer]

I have just purchased life insurance and am a bit confused as to how payment works upon death. I have a 2 year old DD and would like her to receive the bulk of any payout. Would it be best if I ask a solicitor to draw up a will? I'm quite unknowledgable about how it all works.

Any advice would be greatly appreciated!

Life Insurance is generally written in such a way that it doesn't fall into your estate. This is to avoid inheritance tax being payable upon it.

So your will covers all other assets (your house, contents, cars, savings, shares etc) and assets which are held on trust (life insurance, death in service benefits etc) are dealt with separately.

Your insurance company will have asked you who you wish to benefit from the proceeds of that policy.

It's always a good idea to have a will, particularly when you have children, as you may wish to appoint a guardian.

(I'm a will writer by the way).

Mumblechum- we have life insurance, are you saying that this will already be 'dealt with ' and wouldnt need including in a will?\

I do not have a will but think we need to draw up something to clarify guardian for the children- can a will be as simple as that? (we have no other assets/property etc.)

Car is on finance- no savings

That's interesting mumblechum - my insurance company didn't ask me that. I've been wondering something similar as a result. They sent me a form about setting up a trust instead when I queried it along with a comment that I was being a bit of a worrier

Sorry dancer - just realised I've hijacked your thread.

Well in most cases if the person getting the money is underaged you WILL need a trust for the money to go into. A 10 y/o doesn't get the money for example.

You can most definitely mention your life insurance in your Will, including if your beneficiaries are underage, what happens, but also call your insurance to ask about selecting someone and what their default is.

Mine (in Australia) for example defaulted to "my estate". By not selecting a beneficiary it would become part of my estate and if someone challenged my Will they could stand to get that money. However by selecting a beneficiary (or many of them) those people get the money directly and don't have to wait for Probate (typically) and it can't be challenged (well, unless people claim I was killed by that person :P).

Don't be afraid to ask questions. Ask your insurance company, then speak to a lawyer. Dot your i's, cross your t's.

The law in Australia is very different to the UK. In the UK many life insurances are written in trust. That means the money does not form part of your estate and hence is not subject to IHT. It also means that nothing you put in your will has any effect on the payout. That is determined by the insurance company. They will provide an "Expression of Wish" form that allows you to say who you want to benefit but they are not bound to follow your wishes (although they normally will).

PRH is spot on as usual :-)