When it comes to estate planning, many people focus on nothing more than creating a will or trust. They get so caught up in who will receive what when they pass on that they overlook other important details.
Life insurance can be an essential estate-planning tool when used in the right way. It allows you to leave more money behind to the people who matter the most, while also providing immediate cash following your passing.
When purchasing a life insurance policy, do so with estate planning in mind. For example, take caution when naming your beneficiary. While you can make a change in the future, for the meantime this is the person who is in line to receive the death benefit after your passing.
In addition to a spouse and children, you can name anyone else you want as your beneficiary. An example of this may be your favorite charity or organization.
Another benefit of life insurance as an estate planning tool is the ability for the beneficiary to receive the death benefit in an income tax-free manner.
Estate planning may not be the most exciting thing you do, but when you take the right steps, it will give you peace of mind. This is an essential tool that can go a long way in helping both you and your family in a number of ways.
When it comes time to purchase a life insurance policy and/or tackle the estate planning process, make sure you answer all the most important questions. You want to make sure you are using this tool to your advantage.
Source: Morgan Stanley, “Using Life Insurance as an Estate Planning Tool,” accessed Aug. 03, 2017