Most people do have some assets that make up their estate, even if there aren’t many assets in total. However, sometimes these assets may not leave behind enough liquidity for your loved ones to make important decisions in the aftermath of your death. For this reason, among others, you might want a life insurance policy included in your estate plan.
You’re probably already familiar with the general concept of life insurance. When you pass away, any beneficiaries listed on your life insurance policy are eligible to receive the proceeds from the life insurance company. In many cases, life insurance is an added benefit for specific employees but can also be purchased privately to support a family or charitable causes after the policyholder’s death.
Having a life insurance policy provides you with additional protection in the event that you don’t have liquid assets or substantial resources to support your family should you pass away. However, there are several other benefits to a life insurance policy as well.
These benefits include balancing your estate among surviving family members to equalize inheritances among heirs, thereby minimizing the possibility of arguments. Estate liquidity becomes crucial since significant portions of your estate may be tied up in assets that are not easily sold or converted into cash; life insurance enhances access to funds when they’re needed most. In most jurisdictions, when structured properly, a life insurance policy placed inside a trust may be protected from creditors, thus safeguarding your assets.
Creating a tax-free inheritance for your beneficiaries through estate planning is also achievable. Through a life insurance policy and charitable giving, you can leave a lasting impact on the organizations and causes you care about by appropriately purchasing, creating, and funding a life insurance policy. For more information about the different types of life insurance policies that can be used as part of your estate plan, consult with an estate planning attorney today.