Determining how to meet your loved ones’ needs and accomplish your financial goals are the primary tasks of an estate plan. In addition, with a well-constructed plan, you can prepare for predictable events, such as the need to eventually pass down your business or sell any real estate you may own. A comprehensive estate plan can also protect your family in less-certain circumstances, such as a health-related issue that leaves them on their own earlier than expected.
Including life insurance as part of a comprehensive estate plan can help you ensure that your family receives sufficient support when you pass, as they navigate both their immediate financial needs and their long-term expenses.
Maintaining your family's lifestyle: Ideally, you’ll want to provide sufficient funds for your spouse and children to afford necessities such as education, housing and health care, as well as any other activities that improve their overall well-being, should anything happen to you. Life insurance death-benefit proceeds can help replace your lost income and pay for expenses so that your loved ones can move forward with less financial stress.
Providing for a blended family: Life insurance can make it possible to leave death-benefit proceeds to provide for your current spouse or your children from previous marriages at your passing. Some people may even want to provide for a former spouse, depending on the age of your children and the relationship dynamics between families.
Balancing inheritances: Life insurance allows you to designate a specific beneficiary to receive the death-benefit proceeds from the policy, which can allow for you to provide for one heir, where another heir may be receiving a separate indivisible asset. This arrangement can help prevent tension between family members and ensure that your heirs are treated fairly and equitably—according to your wishes.
Paying estate settlement costs: Life insurance death-benefit proceeds can be used to pay settlement expenses, including administrative costs and potential estate taxes. This approach allows beneficiaries to preserve inherited assets, such as artwork, property and other family heirlooms, rather than having to liquidate them to pay these expenses.
Transitioning a business: As a business owner, you’ll need a plan for the future of your company, and it’s important to decide in advance who will be the successor. Whether it’s your child, family member or partner who is slated to take over the company, as a means of funding for most types of buy-sell arrangements, he or she could be the owner and beneficiary of a life insurance policy on your life. This policy owner (successor) can then use the death-benefit proceeds to purchase your interest in the business when you pass.
If your children are your successors, they can use life insurance death-benefit proceeds to purchase your interest from your estate or spouse and continue to run the business in your absence. Alternatively, if you plan for a business partner to run the company, your business partner can use life insurance death-benefit proceeds to purchase your share from your estate or spouse. This structure means your estate or spouse can receive cash from the sale—and helps ensure that your business will survive.
Preparing for the future
Whether your priority is family, business or both, incorporating life insurance into your estate plan can provide flexibility for your unique needs.
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By Pamela Crawford, author, Easy Patio Veggies & Herbs
Photographs by Pamela Crawford
Pamela has written a great article about mixing herbs in containers. Herbs are natural companions with different textures for interest. The herb mix of parsley, sage, rosemary and thyme offers lots of flavor from a small combination loaded with textural interest.
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