Do you have a life insurance policy to support your loved ones if something happened to you? Without one, you’re leaving them exposed to risk. Many people use life insurance as one vehicle to pass on assets to their families.
Leaving behind assets to your loved ones is a common goal for anyone creating their estate plan but when you don’t think carefully about the tax environment or the methods available to you to leave behind assets, you could leave your family members facing unnecessary problems.
Life insurance might assist in the payment of estate taxes. This is because for those people who have a taxable estate above $11.7 million federally in 2021, life insurance can be an important way to provide instant liquidity to pay that tax.
Those taxes are due 9 months after death, however, if a life insurance policy in question was owned by the deceased, this can also give family members immediate proceeds to help pay for other expenses, such as being reimbursed for funeral costs. There are several different ways that you can use life insurance as part of your bigger estate plan but you need to be prepared to consult with an experienced attorney to walk through your options and get a better understanding of what to expect and how to avoid some of the most common mistakes made in using a life insurance policy. You can help support your loved ones by working with a lawyer well in advance.