WHY LIFE INSURANCE IS AN IMPORTANT ESTATE PLANNING TOOL

         As a Jacksonville, Florida Estate Planning Attorney, I work regularly with life insurance agents as part of the estate planning team.  Life insurance is helpful in many estate planning situations.  Some examples are:

          1.  A family with young children.  Life insurance can replace the income if a parent dies prematurely in order to help raise the children and put them through college.

          2.  Blended families.  What if a husband is in a second marriage with a new child, and also has grown children from a prior marriage?  Life insurance provides a means for him to leave funds to his older children at death while still providing for his new wife and child. 

          3.  Business owners.  Most business owners know that a buy-sell agreement is an important planning tool to make sure that there is a smooth transition if one of the owners retires or dies.  However, this buy-sell agreement may not work if there is not sufficient cash available to pay off the owner’s family.  Life insurance helps provide the cash that makes a buy-sell agreement work. 

          4.  Payment of estate taxes.  Many times, estates are not liquid or there is property that everyone wishes to keep in the family.  Life insurance provides a means to pay estate taxes without having to sell family property.  When combined with gift giving strategies, such as creating an irrevocable life insurance trust, life insurance can provide leverage so that you may use pennies on the dollar to transfer assets to your family without estate taxes. 

          You may have heard that life insurance is tax-free.  Life insurance benefits only are free from income tax.  However, they will be subject to estate taxes at your death.  We are available to discuss specific estate tax planning strategies that can keep life insurance out of your estate. 

          If you are considering your estate planning, you may wish to also have an older life insurance policy reviewed.  Your insurance agent or financial advisor may be able to help you obtain a better policy now.  People are living longer than they were 20 or 30 years ago, so you may be able to obtain a greater death benefit at a lower premium because life insurance generally is less expensive than it was many years ago.  These are just some examples of how we utilize life insurance as Jacksonville, Florida Estate Planning Attorneys.