Estate and Legacy Planning

Leave a Legacy

Life insurance can help when your goals turn from building and protecting your assets to transferring them to your heirs or your favorite charity.

Facilitate the Transfer of Your Estate

The death benefit life insurance provides is not subject to the probate process if it is paid to a named beneficiary instead of your estate; so, it can provide funds to your beneficiaries more privately and generally faster than other assets in your estate. Life insurance can also help facilitate the transfer of your estate by providing your heirs with access to money shortly after your passing to help them pay off debts, such as credit cards, a mortgage or an auto loan, final expenses, estate administration costs, and state estate or inheritance taxes.

Equalize Your Estate Among Your Heirs

You can also use life insurance to equalize inheritances among your children. For example, if you own a family business, you may want children who are active in the business to inherit it. You can then use the life insurance death benefit to provide a comparable inheritance to those not involved in the business. Also, in a second marriage situation, the death benefit can help provide an inheritance to children from previous marriages.

Give to a Favorite Charity or Organization

While the life insurance death benefit can be used to provide a gift to loved ones, it can also be used to leave a one-time gift to a favorite organization or charity or, if managed through a trust, to provide a gift that can fund the trust forever. For a relatively small premium payment, life insurance can help you leave a sizable financial legacy to a cause that you care for deeply.

Pay Estate Costs

Life insurance has often been used to help pay estate taxes. The American Taxpayer Relief Act of 2012 now allows estates in the range of $5 million for singles and $10 million for married couples to pass free of federal estate taxes. (The Applicable Exclusion amount for 2015 is $5.43 million.) This means that heirs of most estates won’t have to pay federal estate taxes. Heirs can, however, use the life insurance death benefit to pay for other liabilities such as state estate or inheritance taxes and income tax on inherited IRAs.