Why is life insurance part of the estate planning process?
(1) Create an estate that will support dependents: The most essential function of life insurance is to assure the necessary support for dependents in the event of a breadwinner’s premature death. (2) Preserve assets that would otherwise have to be sold to pay any estate taxes: Whether or not your holdings are illiquid, a large percentage of them may have to have to be sold within nine months of your (or a surviving spouse’s) death. Life insurance provides cash that may be needed after a death occurs. (3) Equalize or balance the value of your children’s individual inheritances: If only some of your children will inherit certain assets – for example, a family business or a home (including a second residence) – life insurance for the benefit of other family members is available to equalize the distribution of your estate. (4) Fund a buy-sell agreement or business succession plan: Business buy-sell agreements or succession plans create rights and obligations to transfer or purchase busines
