Life insurance can play a critical role in an estate plan because the insurance proceeds from an active policy can be counted on to give loved one’s liquidity when it is needed.
Although there are certainly other assets that you will think about in the estate planning process and especially large ones such as a home, bear in mind that it could be difficult for a loved one or beneficiary to liquidate those assets relatively quickly.
There may be serious financial concerns after the loss of a loved one and life insurance policy proceeds can be seen as an important component of the overall estate plan because they give that necessary liquidity to handle immediate concerns and give the person more time to work through their grief and deal with the long range concerns such as choosing whether to stay in or sell a piece of property.
There are several common life insurance errors, however, that can damage your estate planning. These include:
- Naming only one beneficiary
- Naming the estate as the beneficiary
- Carrying inadequate insurance
- Putting your life insurance policy in the file and forget drawer and failing to pay it
Is life insurance a part of your bigger estate plan? If it’s not currently, it should be. Working with a financial advisor as well as an estate planning lawyer in Pasadena is strongly recommended for long-term planning.
