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Life insurance policy

We are a S corp in Minnesota. The company holds a life insurance policy on one of the share holders. His wife is the beneficiary. There is no exit plan in the event of a death. So in the event of a death would the state have access to the insurance policy. We are asking because we are wondering until we have completed an exit plan what woud happen to the life insurance policy.

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Attorney answers (1)

Reputation Level 11
Life Insurance Beneficiaries will recieve the proceeds upon death "by operation of law". Simply stated, it will not go into the estate (I think you mean estate) but directly to the spouse. If the policy is meant to pay out a spouse upon the death of one of the owners, you should change that beneficiary to the company or the other owner (dependent on how you will set up your Operating Agreement and Buy-Sell). The best advice I could give is to get that Business Succession plan set up and arrange the insurance the right way.

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