(a) designate one or more beneficiaries to receive the insurance proceeds upon your death, or
(b) make the proceeds payable to your probate estate or to a trust created by you during your lifetime or by your will.
If insurance proceeds are payable to your estate, they will be distributed as part of your general estate in accordance with the terms of your will or, if you die without a will, according to the applicable state laws of intestate succession. If the proceeds are payable to a trust, they will be held and distributed in the same manner as the other trust assets and may be protected from creditors' claims. Insurance proceeds that are payable directly to a minor child generally will necessitate the court appointment of a legal guardian or conservator. This can be avoided by naming a trust or custodial account under the state transfers-to-minors law as the beneficiary. Trusts often are used for insurance proceeds, even if the trust beneficiary is not a minor, to protect the assets from a creditors, divorce, to provide income tax planning and distribution flexibility, and to provide centralized or professional management of the proceeds.