When you think about life insurance, you probably consider protecting those you leave behind from the financial burdens associated with your passing. You may not realize that life insurance can play a crucial role in estate planning in North Dakota, impacting how your assets are distributed. Here are six benefits life insurance offers when it comes to estate planning.
Paying estate taxes
Nine months after the owner of an estate dies, estate taxes are due. Loans, liquidations, investments, and other means may cover these. But it’s not always enough. A life insurance policy is given to beneficiaries tax-free. The beneficiaries of your estate can use it to alleviate the tax burden of estate planning.
Ensuring equitable asset distribution
When assets like businesses and residences are divided among multiple heirs, there can be disagreements over how these assets are used. A life insurance policy can be used to offset the value of other assets. So one heir could be given the business and the other a life insurance policy of equal value.
Replacing lost income
As a breadwinner, you may be responsible for the financial well-being of your family. When you die, your family loses a significant amount of income. You can set up your life insurance policy to replace income, cover unexpected medical expenses, or cover debts.
Providing for a blended family
Life insurance policies allow you to leave death benefits for your spouse and children. You can also provide for those from previous marriages.
Transitioning your business
If you own a business with a partner, you could give your life insurance policy to the individual who will take over the company when you die. They can use the policy to purchase your part of the business and continue running it in your absence.
Covering debt
Some debts can be charged against your estate when you die. A life insurance policy can cover these debts, ensuring that your heirs receive your entire estate.
Clearly, getting life insurance shows that you care for those you leave behind. Don’t delay. Now is the time to start thinking about your estate plan.