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Roadside Assistance
Specialty Auto Insurance
24-Hour Customer Service
Towing
Rental Reimbursement
Personal Injury Protection (PIP)
Medical Payments Coverage
Home Insurance
Property Insurance
Homeowners Liability
Renters Insurance
Condo Insurance
Mobile Home Insurance
Scheduled Property Insurance
Flood Insurance
Landlords Insurance
In-Home Business Insurance
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Long-Term Care Insurance
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Child Health Insurance
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Boat Insurance
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Motorhome Insurance
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Car Dealership Insurance
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Cleaning Business Insurance
Condo Association Insurance
Construction Insurance
Consulting Firm Insurance
Contractors Insurance
Convenience Store and Gas Station Insurance
Specialty Trade Contractors Insurance
Craft Brewery Insurance
Dental Practice Insurance
Dump Truck Insurance
Educational Facility Insurance
Food Truck Insurance
Fleet Insurance
Handyman Insurance
Garage Insurance
Healthcare Facility Insurance
Healthcare Practice Insurance
HVAC Contractors Insurance
Law Firm Insurance
Life Science Insurance
Liquor Liability Insurance
Livestock Insurance
Maintenance Contractors Insurance
Manufacturing Insurance
Media & Advertising Insurance
Medical Malpractice Insurance
Non Profit Insurance
Nursing Home Insurance
Nursing Insurance
Orthotics & Prosthetics Insurance
Personal Trainer Insurance
Pharmacist Insurance
Pool & Spa Insurance
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Railroad Contractors Insurance
Real Estate Businesses Insurance
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Retail Insurance
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Importance of Life Insurance in Estate Planning
FRIDAY, JANUARY 28, 2022
Importance of Life Insurance in Estate Planning
You can use
life insurance
as part of your estate planning strategy by setting up an irrevocable life insurance trust. This helps you avoid federal estate taxes Life insurance can also help you protect your business interests. Keep reading to learn more about the benefits of incorporating life insurance in your estate planning.
Estate Planning and Life Insurance
Besides leaving a lump of cash for your beneficiaries, life insurance can help with final expenses such as funeral costs, final income taxes and debts. Your beneficiaries can use the money to avoid selling off assets, and life insurance proceeds pass to your beneficiaries without incurring income taxes.
Many policyholders use life insurance to pass on funds to minor children or disabled relatives. Passing the proceeds through an irrevocable insurance trust helps your beneficiaries avoid probate. For example, you can use the trust to set aside child or spousal support.
Additionally, business partners sometimes use life insurance proceeds to fund a buyout if one of them dies.
Irrevocable Trust
You can use life insurance to set up an irrevocable trust. This comes with significant tax benefits, so meet with a professional to ensure you follow all the necessary steps. During this process, you transfer your policy to the trust. Funds are provided for any premiums due. You must typically survive for three years after the transfer to keep the life insurance proceeds out of your estate where it may be subject to federal taxes.
Talk to your insurance agent about the type of insurance that works best for you, depending on your age and life situation. Let them know you plan to transfer the proceeds to an irrevocable trust. When you set up the trust, you must notify the insurer that the policy owner has changed. This may involve filing a gift tax return. For new policies, ensure that the documentation reflects that the trust owns the policy.
Things to Consider
When properly used, life insurance provides financial security for those you leave behind. Funding a trust at death with life insurance proceeds lets you provide for your beneficiaries. Because irrevocable trusts have stringent requirements, some policyholders choose a revocable trust. Revocable trusts are not exempt from federal estate taxes, but they have all the other benefits of using life insurance in estate planning. Both types of trust establish care for minor children, elderly relatives and others who rely on you financially.
Posted 12:52 PM
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estate planning
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