New York Estate Planning & Elder Law Blog
The best types of estate planning involves a multi-faceted approach, which both addresses financial as well as health concerns. While many people are aware of the benefits provided by estate planning tools like wills and advance healthcare directives, one helpful but commonly overlooked estate planning tools are life insurance policies. As a result, to widen the types of estate planning tools that you can consider utilizing as you plan for your incapacity or death, this article reviews the role that life insurance policies can play in estate plans.
# 1 – The Primary Purpose of Life Insurance Policies
Life insurance is often viewed as an income replacement for dependants. For people who are the primary or significant income providers in households, income replacement is not optional. Similarly, if a person is a homemaker or the primary caregiver of a minor or disabled child, it is critical to remember that the cost associated with hiring a replacement caregiver is substantial.
A second primary purpose of life insurance is to provide burial funds. Burials as well as cremation are necessary and often costly processes. If you fail to create a plan to pay for the disposition of your body, your loved ones will be forced to pay this amount. To avoid placing your loved ones in such an undesirable situation, it is crucial to create a plan to pay for these costs while you are still alive.
# 2 – Life Insurance Can Be Customized to Fit Unique
Life insurance fortunately is not a one size fits all option. Instead, life insurance can be customized to fit the goals of the purchaser. Insurance policies can include expensive and inexpensive add-ons to cover long term care. Many people discover that life insurance is ultimately a more affordable option than independent long-term care insurance plans. Additionally, the terms of a life insurance policy can be permanent or established for a fixed term. By first identifying your estate planning goals as well as your available assets, you can then take the necessary steps to custom your life insurance policy to your situation.
# 3 – Life Insurance is Non-Taxable When Received
On receipt, life insurance is not taxed. Tax avoidance means that life insurance can often be utilized to offset liabilities from a taxable estate. Liabilities can come as a result of creditor claims or taxes accrued due to a beneficiary status. For example, a person who passes a home to their children does not realize that medical bills accrued at the end of the person’s life might force the executor to cover payment to creditors. Through the use of life insurance, however, children can offset these debts and keep ownership of the property intact.
Speak with a Knowledgeable Estate Planning Lawyer
Like all other aspects of estate planning, sufficient life insurance planning should involve multiple parties including your financial planner and estate planning lawyer. An experienced estate planning attorney can make sure that your policy works as intended and that your loved ones are sufficiently protected. Do not hesitate to contact Ettinger Law Firm today to schedule a free case evaluation.