Estate planning is a difficult yet necessary part of life; while it revolves around an uncomfortable subject, it is important to provide a plan for asset distribution in order to take care of your loved ones, valuables and remaining debts after you die. In addition to knowing the ins-and-outs of estate planning, it is also important to understand how life insurance policies can affect your assets and any outstanding debts that may remain after you die. Here, the family law and estate planning attorneys at Rodier Family Law discuss how life insurance can impact the intricacies of estate planning.
Life Insurance Can Affect Your Estate
If you have a life insurance plan, it is important to know how it can affect your estate. Many individuals have life insurance plans if they are a significant or sole income provider for their family and wish to provide their loved ones financial security after their passing. There are a variety of different life insurance plans that are applicable for your individual situation, and these different policies can include whole life, term life, universal life and more.
If you have life insurance and are wondering how it will impact the estate planning process, it is important to first recognize if there are multiple beneficiaries on your plan. If there is an additional beneficiary named on your life insurance, the proceeds will pass to the living beneficiary automatically. The proceeds, therefore, do not have to directly go towards outstanding debts and instead will belong to the surviving beneficiary or beneficiaries.
If the decedent of a life insurance policy did not complete a beneficiary designation form or there are no surviving beneficiaries, life insurance proceeds can be used to pay the decedent’s remaining debt or be granted to their surviving heirs-in-law.
Life Insurance Can Protect Assets
If you have valuable family assets, including a family business that you desire to preserve after you die, your life insurance proceeds can be used to ensure your wishes. Specifically, life insurance proceeds can be used to keep a family business in the family and support its continued success after you die. In addition, life insurance proceeds, when passed directly to surviving beneficiaries, can help support surviving family members and protect assets so that they do not have to be used to pay off debts.
Life Insurance Can Help Pay Off Debts
Some individuals prefer to use their life insurance policies to mitigate the burden of outstanding debts or estate taxes. For instance, some individuals may include their estates as beneficiaries of their life insurance, meaning the proceeds will help cover any outstanding debts once they die. In addition, federal estate taxes can be burdensome and often require the estate’s assets to pay them off. If you use the proceeds of your life insurance to pay off your estate taxes, however, you can protect your estate’s valuable assets so they can be passed down to your loved ones.
Speak to a Qualified Family Law and Estate Planning Attorney at Rodier Family Law to Learn More
There are many ways life insurance proceeds can be used after you die, and the ways in which you intend to utilize these funds largely depend on your individual and family situation. That is why it is advisable to speak with a family law attorney, such as a family law and estate planning attorney at Rodier Family Law, to discuss your options and make a decision that best serves you and your loved ones. To speak to a family law attorney about how you can best use your life insurance proceeds in your estate planning endeavors, contact Rodier Family Law today.