Insurance as a solution–1

It goes without saying that a succession plan is essential, but the kind of preparation that is needed for this goes beyond simply writing a will and designating which property would go to which family. One must consider that the legitimate family would, in all likelihood, refuse to share the inheritance with the other family, as this would be like rubbing salt on an open wound

This is one instance where life insurance can provide the solution

By getting a life-insurance coverage and naming the estate as the beneficiary of the policy, the father could designate in his last will the insurance proceeds as the share of the illegitimate children in the total estate. This way, the original estate could be designated solely for the first family. Thus, two instruments are necessary to make this work: a life-insurance policy to create the additional assets in the form of cash from the insurance proceeds or death benefit, and a last will and testament to designate such benefit in favor of the illegitimate children

The important thing to remember here is that the amount of insurance should satisfy the legitime (rightful share) of the illegitimate children, taking into consideration the insurance proceeds as part of the total estate, since the latter is the beneficiary of the policy

Isn't it simpler if the illegitimate children are named as beneficiaries instead?

No. In such a case, the insurance proceeds shall be considered a benefit apart from their inheritance. Thus, they would be entitled to the proceeds of the insurance policy upon the death of their father plus their share in the estate of the latter. This would then put them in a better standing than their legitimate counterparts. Now that would be adding insult to injury

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My best wishes go to three former Ayala Life officemates and colleagues who celebrated their birthdays the past week: My traveling companion and partner Gary Munoz, who I shall always remember for his fatherly ways; my former sales assistant Jo Belleza, who is currently enjoying her vacation in the United States with her sister; and my good old friend, Rudy Macanda, a survivor and warrior like his look-alike, Nur Misuari, who at 61 is still at it--preaching the good news of life insurance as agency manager of Philamlife in Iloilo. Want more information regarding business insurance?

Let me leave you with this Aaronic blessing: The Lord bless you and keep you; the Lord let His face shine upon you and be gracious to you; the Lord turn His face toward you and give you peace  (Numbers 6:24-26). Happy birthday!

This column is dedicated to educating the public about the importance and value of estate and succession planning, discussing inheritance issues usually confronted by families and providing information on possible courses of action. For comments or inquiries, you may e-mail This e-mail address is being protected from spambots. You need JavaScript enabled to view it