We are all aware of the use of life insurance as a vehicle of income replacement. This is how life insurance is most widely utilized in the field of estate planning, and it is extremely important, especially when you have a family that is dependent upon your ongoing income.
However, there are some other uses for life insurance in estate planning and we would like to take a look at a couple of them here.
Life insurance is routinely used to balance inheritances. To provide an example of what this means, consider a scenario where you have a daughter and a son. You decided to continually reinvest your resources into your primary place of residence throughout your life, moving into more and more valuable properties over the years.
When you’re planning your estate you recognize that your home is your most valuable asset by far, and for reasons of your own you want to leave the property to your daughter. To balance inheritances you can take out a life insurance policy equal to the value of the home and make your son the beneficiary so that both of your children are provided for equally.
Life insurance can also be used in small business succession planning. Partners in small businesses take out life insurance policies on one another. When one of them dies, the life insurance policies are used to purchase the share in the business that was owned by the deceased from his or her family members.
These are just two of the ways that life insurance can be used when you are planning your estate. To learn more about how life insurance may play a role in your comprehensive plan for the future, simply arrange for a consultation with a good Hartford estate planning lawyer.