Most people recognize that life insurance is a helpful tool to allow you to provide for your loved ones after you pass away. A life insurance policy helps your loved ones receive assets to help with a range of financial needs if you pass away, and it can help close the gap if you don’t have sufficient assets in your estate or if you’re concerned about how probate may slow down the transfer of assets in your estate.
Depending on the structure of your life insurance policy, you may be able to replace your income, support the payoff of a mortgage, provide important cash flow during a difficult time for your loved ones, or even establish a plan for your children to achieve their educational goals in the future. But life insurance can also be used to accomplish other wealth transfer goals.
For high-net-worth individuals, life insurance can minimize the impact of estate taxes and also provide liquidity to your estate. This may be done with the assistance of an estate planning attorney who can help you to create irrevocable life insurance trusts that exclude the proceeds from the insurance policy payout from your taxable estate. This ensures that this wealth transfer is tax free to beneficiaries. But the policy must be structured appropriately. This tax efficient vehicle may be used to pass on big assets to future generations.
But it is very important to work not only with your estate planning attorney, but with your other financial professionals such as your CPA to help you cover all of your bases and verify that the strategies, tools and documents you select will help you achieve the goals you established. Contact a MI estate planning attorney today to learn more about your options when it comes to estate planning and whether or not an irrevocable life insurance trust makes sense for you.