Life insurance policies and estate planning documents go hand in hand to help you plan for the future and create a smooth transition of assets to your loved ones. As such, it should come as no surprise to learn that when your life insurance needs change, it is often means that it is time to update your overall estate plan. An experienced attorney can help review your family’s needs and goals to determine which updates are most beneficial for your estate plan.
Following are five examples of situations where a change in your life insurance requirements may necessitate a change to your estate plan:
- The size of your estate has grown since you last updated your estate plan. You may want to consider changing ownership on your life insurance policy in order to keep the proceeds from being included in your taxable estate.
- You have young children or a beneficiary with special needs who can benefit from a trust overseeing the proceeds instead of simply distributing everything outright.
- You are considering shifting from a term policy to a whole life policy. Permanent life insurance is worth more than a term policy since it accumulates value on its own, aside from the death benefits. If you opt to switch to whole life, you should update your estate plan to accommodate this new asset.
- You go into business in Orange County and want to use life insurance to serve as income replacement or to be used in buy-sell arrangement with a partner. It is crucial that you update your estate plan under these circumstances to ensure that control of your business is transferred smoothly and efficiently.
- You become the sole breadwinner in your family and need to increase the death benefit of your life insurance policy to protect your family.
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