Life Insurance Blog

Estate Planning With Life Insurance
May 1st, 2009
in Life Insurance

There are some very important things to look at when you are creating your estate plan.

1.  It is important to figure out the necessary liquidity that your beneficiaries will need upon death.  This is something that is often not considered because a person thinks they have enough assets to cover their loved ones.   This may be the case, but the assets may not be in cash and require a liquidation of the assets.  The need for liquidity may require an immediate sale of the asset and command a lower number than the value of the asset.   The other way to get liquidity could be taking a loan to cover the necessary expenses to settle the estate.  This is not a great option as it will create debt for your loved ones.   Life insurance can be a very good tool to create immediate liquidity to the estate.

2.  Will you be subject to Estate Taxes and what is your maximum exemption?  Will the government come in and tax up to 50 % of your non-exempt estate when you pass away?

3.  Have you created a trust?  Should your trust be irrevocable or revocable?  How is it structured and what type of trust is it?

4.  Does all of your beneficiary information match up on all of your assets with the beneficiary information with your trust?  If not, the beneficiaries on the assets will supercede the trust designations.  Make sure all of this matches up.

When you are creating your estate plan, make sure to consult with your tax, financial, and estate planning attorney.   You should make sure you review it every few years and make sure nothing has changed, etc.

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