While sitting in Hinds County Chancery Court this morning waiting to see the judge, I ran across an old friend representing an estate that is a good example of what happens when proper planning is not done.  His client died at age 44, leaving behind a wife and two minor children.  He owned a business which owed more in debt that it had in assets, and had a modest amount of assets of less than $50,000.  Unfortunately, a tort action was pending against the decedent, which now continues against the estate.  Because of the modest size of the estate, the suit would usually be of little concern, except for one additional fact.  The decedent had a sizable life insurance policy and did not name a beneficiary, meaning that his estate is the beneficiary.  Because of the lawsuit, the proceeds of the life insurance policy are now at risk to the plaintiff as a creditor of the estate. 

Because of this loving father's failure to plan, his life insurance intended to protect and provide for his family is at risk. Additionally, even if the lawsuit is ultimately won or dismissed, the proceeds of the estate, including the life insurance proceeds, will have to be divided equally between the wife and two children.  The children's share will be required to be in a guardianship, under court supervision.  This means that, in all likelihood, the children's assets will be limited to investment in CD's or other insured accounts, earning a minimal amount of interest, be subject to costly annual accountings, and be subject to court approval for all withdrawals.  If this decedent had simply named his wife as beneficiary of this policy, all of these results could have been avoided.