The Role of a Second-to-Die Life Insurance Policy

There are many different assets that combine to form your overall estate, and there are many different options when it comes to protecting those assets. Your estate can include real estate, stocks, copyrights, bonds, vehicles, and many other types of property. Your estate value also includes the cash you have on hand. In today’s world, it is not uncommon for high-value estates to be low on cash. While the estate itself may be worth a great deal because of many of the holdings within the estate, there is often a lack of ready cash to take care of important expenses like funeral costs or even state and/or federal estate taxes. If you find yourself in that position, a second-to-die life insurance policy could be an important part of your estate planning toolkit.


A second-to-die life insurance policy has many benefits for many different types of families. However, they can be especially useful in situations where there is a large estate involved. With new legislation, the federal estate tax exemption has doubled and a lot more people do not have to worry about owing the estate tax as the exemption for an individual has been raised to around $11 million and for a couple to around $22 million. The exemption for New York’s state-level estate tax is currently at $5,250,000. Only estates valued over these amounts will be subject to the estate tax.

A second-to-die policy is typically purchased when both spouses are still alive. It differs from a traditional life insurance policy because no benefits are paid at the death of the first spouse. The benefits are paid to a beneficiary after the death of the surviving spouse. This can help beneficiaries take care of a number of financial concerns, especially large concerns like the estate tax liability your estate may be facing.

Choosing the Right Policy

Before rushing out to buy a second-to-die life insurance policy, you need to determine where it fits into your estate plan and if it is the right move for you. In some cases, especially cases where estates have a great deal of liquidity (in other words, cash on hand), it may be an unnecessary expense. An experienced estate planning attorney can help you determine how this type of policy might fit into your comprehensive approach to estate planning.

It will also be important to choose the right policy. How much is the policy worth? What are the premiums? Are there important terms and conditions within the policy that should be considered before purchasing it? It is often helpful to figure out the value of your estate before determining what kind of policy to purchase as you want to make sure the benefits to be paid will meet your goal of helping family members avoid some of the high costs associated with administering an estate – especially a large one. There are also concerns with the benefits of such a policy being included in the surviving spouse’s taxable estate, but there are ways to avoid that outcome when working with an estate planning attorney.

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