Estate Planning Newsletter

• Administering the Estate of a Missing Person
  When an individual dies, their estate must be administered and distributed according to their previously established estate plan (if the decedent executed an estate plan prior to their death) or state intestate succession laws (if the... Read more.
• Legislation Impacting Organ & Tissue Donation
  Statistics from the U.S. Department of Health and Human Services indicate that while an average of 75 people receive an organ transplant each day, 18 people die each day while awaiting an organ transplant. The Uniform Anatomical Gift... Read more.
• Court-Appointed Conservators
  A “conservator” is a court-appointed individual assigned to handle the daily affairs of those who cannot care for themselves due to physical or mental limitations (the “conservatee”). Conservatorships are... Read more.
• Special Needs Trusts and the Disabled
  Some government statistics estimate that between 15% and 20% of all Americans have some form of disability. It is also estimated that the majority of disabled persons will need to avail themselves of public assistance to help pay the... Read more.

• Financial Planning For A Divorce
• Clean Out Your Estate Planning Attic
• Lawyer Has No Duty to Non-Clients Unless Client’s Intent is Definite
• Families get these 3 things wrong about estate planning, advisor says
• Corporate Transparency Act Affects Your Estate Plan

Uses of Life Insurance

There are numerous uses for life insurance. Some are obvious; others are very creative. Some of the most common uses include paying estate taxes, estate administration, inheritance equalizing and many others.

Estate Taxes and Estate Administration Costs

Life insurance is often used to provide necessary liquidity to an estate. Since any federal estate taxes owed are due within nine months of the date of death, and federal estate tax rates begin at can be as high as 40%, life insurance may provide the means to pay the estate taxes without the heirs having to sell off other assets of the estate.

Creating an Estate or Equalizing Inheritances

For young families or those who have not amassed enough wealth to provide for a loved one, life insurance can provide an instant estate and enough assets to provide for the care of a dependent. Life insurance may also be used to provide equivalent funds to children who are not receiving certain assets from your estate. For example, if you are leaving your business to those children who are actively running the business, you may leave to your children who are not involved in the business a life insurance policy with an equivalent value.

Business Transfers / Losses of a Key Employee

Life insurance is often used to provide cash to finance the transfer of a business. As part of a business succession plan, an agreement is entered into with a business owner and a life insurance policy is acquired naming the business owner as the insured. Upon the business owner’s death the life insurance proceeds are used to purchase the owner’s share of the business from his or her estate. Life insurance may also be used to protect a business from the loss of a key employee. Upon the death of a key employee the life insurance proceeds may be used to attract and retain a suitable replacement for the employee.

Funds for College

The increase in the cash value of certain life insurance policies may be used to provide funds for college.

Paying off Mortgages or Other Debt

The proceeds from a life insurance policy may be used to pay off the outstanding mortgages owed or debt of the decedent, allowing the real property to pass to the deceased’s family without any mortgage.

Guaranteeing Loans

Life insurance proceeds can be used to guarantee the repayment of personal or business loans.

Charitable Planning

Life insurance is often used to replace the value of the assets given to a charity, thereby allowing the donor to fulfill their charitable inclinations while at the same time preserving the estate for the donor’s children.