As an Ohio farmer who has weathered everything from employee challenges to crazy weather to wildly shifting market conditions, you understand the importance of hedging your bets and creating backup plans. In fact, one reason why you’re interested in developing an Ohio estate plan is that you want to protect your family, employees, crops and animals from negative contingencies that could happen if you got disabled or died.
One way to hedge against setbacks is to purchase insurance. But what happens if your insurance fails to function as you want it to function? Many farmers make mistakes with respect to their life insurance policies, which redound to have negative effects on the entire estate. For instance:
Problem #1. The insurance policy pays out to your beneficiaries at an inappropriate time or in installments that are less than ideal.
For instance, your current payment plan could lead to negative tax consequences that could mean that your spouse or children won’t collect as much as they could. Or the benefits could come too quickly or too slowly for the beneficiaries to make maximum use of them.
Problem #2. You fail to name contingent beneficiaries.
For instance, let’s say that you name your spouse as the person who will collect your life insurance policy’s proceeds, but then you both die in a car accident. Where will the proceeds of the policy go? Add contingent beneficiaries to your policies.
Problem #3. You fail to update policies over time, which could have a devastating effect on your estate planning.
For instance, let’s say that you originally named a business partner as a beneficiary, but then you had a falling out with that partner. If you fail to update your policy, the money from your insurance could still wind up going to him.
Problem #4. You lose your policy, or your beneficiaries don’t know where to find it.
It’s all well and good to make effective plans for your farm. But if no one knows those plans exist, then they might never be put into action. That won't do your family and your other beneficiaries much good. Make sure your attorney, children, and other potential heirs know where you keep your important documents, such as your insurance policy, so they can find them in the event of an emergency and honor your wishes.
Problem #5. The insurance company gives you or your beneficiaries friction.
For instance, the insurance company might simply refuse to pay out benefits for bureaucratic reasons or due to a clerical error. Or the insurance company might go bankrupt or struggle to pay its debts in a timely fashion.
To structure your policies and plans in a way that minimizes the likelihood of insurance setbacks, contact our Ohio farm estate planning lawyers at the Gudorf Law Firm today at 1-877-483-6730 for a free consultation.