Many New Jersey residents and most adults across the country have numerous questions when it comes to estate planning. Though you may know that you need a plan, you may not have a concrete idea of what your plan should include. In particular, the fact that there are so many options to use when creating your plan may seem overwhelming though you know that they could help you create the best plan for you and your family.
Often, taking one aspect of estate planning at a time could help move the process forward without become too overwhelming. For example, do you have life insurance? You may have employer-provided life insurance due to the nature of your job, or you may have decided to take out your own policy for other reasons. In any case, did you know that your life insurance could play an important role in your estate plan?
Life insurance and your estate plan
Life insurance could act as a valuable resource to your loved ones after your passing. You can name a specific beneficiary to obtain the payout in the event of your demise, and often, that payout can help the beneficiary make ends meet without your income and have other uses. When it comes to your estate plan and life insurance working together, you may want to consider the following details:
- Life insurance could be used to provide funds for the guardian of your children in the event of your passing.
- Policy beneficiaries typically do not have to pay taxes on the payout because the estate typically has an obligation to handle those taxes.
- In addition to taxes on the policy payment itself, you could indicate that the payout should be used to cover any estate taxes owed after your demise.
- If you have concerns about ensuring that your children from a first marriage and your new spouse have fair shares, you could use the payout to provide for your new spouse while using other assets for your children.
Life insurance is often more versatile than many individuals realize, and it can act as a useful planning tool when considering your estate. Of course, as life changes, the details of your life insurance policy may also change as well as the details of your estate plan. Reviewing your plans and coverage regularly may ensure that your wishes remain updated and in line with your available insurance coverage.