contractors - protect yourself from legal liabilities

The Role Of Life Insurance In Estate Planning

19 June 2023

Lawrence Ross

You can use different estate planning tools to secure your loved ones' future in case of death. The best tools depend on your assets, wishes, and beneficiaries. However, almost everyone can benefit from life insurance. Below are some ways a life insurance policy enhances your estate planning goals.

Increasing Inheritance

You can use a life insurance policy to increase the inheritance value available to your beneficiaries. For example, your children can share the life inheritance proceeds and other assets you have left them. In such a case, your estate planning instructions should be clear on the division of the life insurance proceeds.

Settling Estate Liabilities

Your beneficiaries can also use your life insurance policy to settle your estate's liabilities. For example, the government expects taxes from your estate, such as state and federal, depending on the estate's value. The government may also demand property taxes from the beneficiaries when real estate property changes ownership. Life insurance proceeds can settle such taxes.

The life insurance package can also settle debts you did not manage to pay before your demise. Maybe you refinanced your home, financed a car purchase, or took a personal loan—the beneficiaries can use the life insurance money to settle the debts and protect the collaterals.

Buying Out Others

Some assets are not easy to divide among beneficiaries. Examples include businesses, artwork, and real estate properties. If your beneficiaries inherit such assets, some can use the life insurance money to buy out the others. For example, one child can use their share of the life insurance money to buy out their sibling's business share.

Similarly, a beneficiary can use the life insurance money to buy out third parties with states in your estate. Say you co-own a vacation home with another person and wish to leave the property to your child. The child can use the life insurance money to buy out the other party and gain the vacation home's full ownership.

Providing Quick Cash

Lastly, buying life insurance is one of the best ways to ensure your beneficiaries can get cash fast after your demise. This arrangement is great if you are your family's sole breadwinner. Other forms of inheritance can take time to reach the beneficiaries' hands, but life insurance companies usually pay life insurance benefits fast.

A good estate plan should capture your wishes in detail and be legally enforceable. To learn more, visit a law firm's website, such as https://wolfleyandwolfley.com/.

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About Me

My husband has worked in the construction industry for nearly twenty years. Three years ago, he decided to open his own business performing renovation work. Having so much experience helped him land clients and showed him that he has to protect himself from the clients that aren't so easy to please. We started working with an attorney in the beginning to have all of the contracts drawn up and have called when things go badly with clients. This blog will show you what you need to do to protect yourself from legal liabilities when you work as a contractor in today's world.