Thursday, October 6, 2011

A Few Non-Tax Reasons For Using Insurance In Estate Planning

Often life insurance is used to offset estate taxes when an individual with a large estate dies. There are actually many non-tax reasons to use life insurance in estate planning whether or not an individual has a large estate. Here are a few non-tax reasons for using life insurance in estate planning:

  • Special Needs Planning (e.g. fund a special needs trust for a special needs child)

  • Estate Equalization (e.g. ensure each child has an equal inheritance when an estate owns an asset that is not easy to divide equally, like a business)

  • Charitable Giving (e.g. money set aside to be given to a favorite charity of the deceased person)

  • Special Planning or Purposes (e.g. fund children's education or other specific purposes)

  • Maintain Family Assets (e.g. family cabin expenses)

  • Income Replacement When Children Are Minors (e.g. one spouse dies and children are still minors)

  • Income Replacement For Children Of Dual-Income Households (e.g. spouse dies second income is required to survive financially.)

  • Business Exit Strategies (e.g. buy-sell agreements)

  • Enrich Estate Upon Death (e.g. wish children to have a larger inheritance)

  • Pay Outstanding Debt Still Owed After Death (e.g. pay off mortgage on home)
As mentioned above, there are a lot of non-tax reasons to include insurance when doing estate planning.

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