Wednesday, June 7, 2017

Individualizing Estate Planning Using Life Insurance


Life insurance has many uses in an estate plan, observes investopedia, listing several of those uses:
  • To provide liquidity in an estate (to pay expenses, provide access to cash for heirs while the estate is being settled)
  • To repay debts
  • To replace income that the deceased was providing to the household
  • To accumulate wealth
Married couples and business partners can make use of special types of insurance policies:

First-to-die (also called joint whole life insurance)
When one of the couple (or of the group) dies, benefits are paid out to the surviving 
insured. Typically this arrangement is used to insure spouses or a parent and child.
 
Survivorship life (also called second-to-die)
This policy pays out upon the last death of the couple or group instead of the first one. This type of insurance is also typically used for spouses, in parent-child or business  
partner situations.

There are some circumstances where it makes sense to continue to carry life insurance past retirement, investopedia goes on to explain:
  • You don’t have enough of a nest egg to provide for a surviving spouse
  • Disabled adult children or other relatives rely on you for lifelong care
  • You’re wealthy and need a tax advantaged savings vehicle (you’ve maxed out your savings in other tax-advantaged accounts)
Yet, failure to consider the estate and gift tax consequences of life insurance is a common mistake, Forbes points out. The decision as to how the policy should be owned and controlled can be complex and is highly individualized, the authors explain, with those decisions dependent on individual circumstances: family dynamics, net worth, financial position, personal preferences and even philosophy about transferring assets to future generations.

That part about estate planning being highly individualized is very much in tune with our approach at the law firm of Rebecca W. Geyer & Associates. Our goal? To be a resource for clients, combining clear and concise legal recommendations with responsiveness and compassion, creating solutions to best meet each client’s needs.

- by Ronnie of the Rebecca W. Geyer blog team

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