What Function Does Life Insurance Play In Estate Planning?
There are several ways to use life insurance in estate planning, but one common application is to give loved ones extra financial help. Life insurance products can assist in providing your family members with instant funds that can be used to replace lost income, pay for funeral expenses, and settle any obligations. The taxes your estate will be charged after your death often do not apply to this insurance. Families frequently use life insurance proceeds to pay federal estate taxes, primarily if asset distribution problems exist.
In estate planning, life insurance is frequently used to partition ownership of a family firm. Many business owners will purchase life insurance that specifies how ownership will be distributed in the event of their passing. If ownership is divided between heirs, each person may choose to sell or retain their ownership interest in the company. In the event of a family member’s passing, these policies are meant to guarantee a seamless transfer of ownership and continue business operations.
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