Estate Planning With Life Insurance

Life insurance represents a signficant source of cash that can be used in any estate plan.  Every person should have their life insurance needs reviewed by a qualified agent.  The table below identifies some common uses of life insurance, along with the type of estate plan that may be used to accomplish the specific objective.

 

Types of Complete Estate Plans:

Primary Estate Plan

Probate Avoidance Plan

Living Trust Plan

Use of Life Insurance Death Benefits Type of Estate Plan Used
Income Replacement for Spouse Any Complete Estate Plan
Support for Minor Children Primary, Living Trust
Support for Disabled Child ("Special Needs") Primary, Living Trust
Support for Other Family Member Primary, Living Trust
Debt & Mortgage Payoff Primary, Living Trust
Funeral & Burial Expenses Primary, Living Trust
Business Transition, Buyout, or Liquidation Probate Avoidance
Employee Benefits (Key Person, Exec. Bonus) Any Complete Estate Plan
Payment of Education Expenses Primary, Living Trust
Payment of Estate Taxes** Primary, Living Trust
Charitable Giving Any Complete Estate Plan
Family Legacy (Dynasty Trust) Living Trust
Property Preservation (e.g. Family Cottage) Living Trust
Divorce Settlement Any Complete Estate Plan
Completion of Deferred Compensation Plan Any Complete Estate Plan
Asset Protection Any Complete Estate Plan

** Estate tax reduction may require additional planning, including tax exemption trusts, or irrevocable life insurance trusts