When liquidity is a top concern in administering someone’s estate plan, a life insurance policy can be one of the most powerful tools created by the deceased to pass on assets to their loved ones sooner rather than later. This insurance money can be used to pay expenses that are more immediate, such as an estate tax while also protecting the intact nature of other assets.
Many assets for most people’s estate can be tied up in probate, in IRAs or in real estate, which means that loved ones who are in need of cash sooner rather than later will struggle to be able to pull this information together quickly. Probate can take months or years and can be especially complicated when there are multiple assets that must go through the probate process.
A will might not go far enough, because even if you’ve clearly listed what you want each beneficiary to receive, these assets might not be easily accessed by the party you wanted. It could be weeks or months before they are freed up from probate, and that process might take even longer if there are estate planning conflicts or contests filed.
To make things easier for your loved ones, buying a life insurance policy means that this will pass outside of probate and give your loved ones immediate support when they need it the most. Discuss with your Pasadena estate planning attorney how your life insurance policy can serve as an important component in your overall plan.