No one likes to think about his or her own demise. But at some point, planning for the inevitable is essential, especially if children are a part of the process. Most individuals think mainly of a will, but this is only one component of a comprehensive estate plan. Those in British Columbia who are thinking about estate planning may also consider how life insurance may play a part in the process.
The aim of life insurance in depends upon the stage of a person’s journey in life. Younger couples with children likely view life insurance as security in case of premature death. Older folks may think about life insurance as a financial tool in estate planning.
Why Use Life Insurance As An Estate Planning Tool
Including life insurance in an estate plan can bring a number of financial advantages.
Generally, if the proceeds flow directly to the policy’s beneficiary rather than to the estate, the amount is not subject to income tax and probate fees do not apply.
Insurance may also provide an estate with liquid cash to pay off the deceased’s final income taxes or other estate debts. This can help prevent non-liquid assets from being sold off in order to pay debts, but instead, allows those assets to remain intact for distribution to the named heirs. Proceeds of a policy may also act as a source of income for a beneficiary.
Estate planning can be complicated, with many options and financial impacts.
Consulting with a British Columbia lawyer experienced in estate planning might be a wise idea. A lawyer will be able to provide advice as to how life insurance can be beneficial in accomplishing one’s estate planning objectives.