If you’ve been postponing estate planning, don’t wait until it’s too late. When it comes to estate planning, life insurance can serve as a significant tool that can be utilized to assist your loved ones in covering your final expenses and estate taxes. However, how you incorporate your life insurance into the estate planning will vary based on whether you have a term or permanent life policy. Please continue reading and contact a knowledgeable Montgomery County Estate Planning Attorney who can help you determine the best policy for your particular needs.
What are the different types of life insurance for estate planning?
Many often question when to start using life insurance in their estate planning. Generally, it is wise to consider life insurance in estate planning when you have accumulated substantial assets, such as a home, or have started a family, as it can protect the future. You can choose to establish different types of life insurance during estate planning.
Firstly, term life insurance provides coverage at a fixed rate for a limited period. It pays a death benefit if you pass away during the active policy period. This insurance can support their estate until they reach a certain age. This can be a great option if you can provide payments toward your final expenses, estate taxes, and inheritances from savings accounts or investments. Universal or whole life insurance is a permanent policy that stays in effect for your entire life. If you want to ensure your final expenses, estate taxes, and inheritance you plan to leave behind are covered, these policies can help ensure you receive life insurance death benefits regardless of when you pass away.
How can it be used for estate planning?
When an individual creates an estate plan, they usually have their loved ones in mind. As such, it is imperative to understand that you can use life insurance for estate planning purposes to help your family pay off estate taxes, ensure an inheritance for your beneficiaries, and cover your final expenses. Understandably, you do not want to burden your loved ones with your final costs after you’ve departed. Fortunately, you can use your life insurance death benefits to cover those expenses.
Now, you may be wondering what final expenses your life insurance may be able to cover after you pass away. Life insurance can usually cover funeral expenses, outstanding debts, and final income taxes. Unfortunately, funerals can cost thousands of dollars, and your family may not have enough to cover them. Final expense life insurance policies can cover your funeral costs, ensuring your last wishes are fulfilled as desired. If you have any debts when you may, your heirs may become liable. A life insurance policy can help them cover their outstanding debts, so no money has to come out of their pockets. Furthermore, your heirs may be liable for covering any back taxes that are left unpaid, as well as inheritance taxes. A death benefit can help cover any estate taxes.
If you are ready to start using life insurance in your estate planning, contact a trusted Montgomery County estate planning attorney from JD Katz today. Our firm is prepared to assist you in ensuring your loved ones are not burdened with your final expenses and estate taxes.