Life insurance is often used to provide for loved ones if a primary breadwinner passes away. However, there are also many other benefits of life insurance when it comes to your estate plan.
Talk to your estate planning attorney about any of the following ways you could use life insurance in your estate plan.
Probate Avoidance
Many assets will go through probate when a person passes away. The probate process is public and can take—at a minimum—several months to complete.
This can cause problems if your heirs need their inheritance to pay bills. Your estate’s executor can’t release the probate assets to your heirs until creditors are notified and given a chance to present claims against your estate.
Fortunately, there are various ways to avoid probate. Life insurance with a named beneficiary is one asset that doesn’t need to be probated. This can provide much-needed financial resources for your family while they wait for the probate process to be completed.
Life Insurance Trusts
Life insurance trusts are another popular estate planning technique. This strategy can work particularly well for high net worth individuals who are interested in minimizing estate taxes.
An irrevocable trust is set up and owns a life insurance policy on the grantor. When executed properly, the grantor does not legally own the trust property because the trust is irrevocable. The trust assets should therefore not be included in the grantor’s estate for estate tax purposes.
Disability or Other Benefits
Some insurance policies may allow for riders that offer additional benefits. For example, you can purchase a rider on your life insurance policy that provides payment of some benefits if you suffer from a chronic illness or become disabled.
Life insurance policies may come with some riders automatically included, such as an accelerated death benefit. This rider provides a payout of some of the policy’s benefits if you are diagnosed with a terminal illness.
There are many other ways to use life insurance to provide for your loved ones and leave behind a legacy. Talk to an estate planning attorney to discuss how to use life insurance as part of your comprehensive estate plan.
King Law Offices is a full-service law firm with an outstanding team of professionals who work diligently, creatively, and compassionately on behalf of our clients each day. We serve the Upstate of South Carolina and Western North Carolina. Call 888-748-KING (5464) today to set up a consultation with one of our dedicated estate planning attorneys.
