People rarely think about what is going to happen in their absence. That is true for a husband or a wife, a parent and a grandparent. Thinking about estate planning and talking about planning the finances after their death can be very unpleasant for many people in their youth. However, an estate plan provides the security your family needs in the future, and it offers the peace of mind one needs to lead a happy life. The plan should be able to reflect your wishes and uphold the family’s wellbeing above everything else.
Just out of curiosity, when a finance expert tried interviewing people about their estate plans, these are a few of the standard responses he had received:
- “Our family does not have one.”
- “We did make a will a couple of years ago, but we do not have any plan for our non-liquid assets.”
- “We do have an estate plan. However, it is so old that we do not know what it entails right now.”
In most cases, people think about getting their wills up-to-date and getting their estate plans in place, but they are too reluctant to face the reality of death and loss. People are more likely to avoid the unpleasant task of talking to their family members about their needs and wants entirely. Here, the presence of a financial advisor can always help. A financial advisor or an attorney can act as the mediator between you and the rest of your family. You will need an experienced legal advisor while drafting your will and while chalking out your estate plan.
How can you fuel your estate plan?
Go for a second to die life insurance policy to secure a comfortable standard of living. This kind of life insurance is almost ubiquitous to estate plans. They can provide for tax expenses, educational expenses, and business expenses within the family.
In the case of smaller estates, the death taxes are not as significant. For more extensive estates, the same taxes can be debilitating for the family, and it can lead individual members to sell off parts of the estate to avoid paying such considerable amounts. Here, second to die policies become the saviors. The payout upon the death of the last (second) holder is usually tax-free as per the latest US government rules. Heirs can use this money to pay the death taxes that befall them upon the death of their parent or grandparent.
How can an estate plan secure the future?
Permanent insurance only pays upon the death of the second surviving holder can easily pay for a myriad of expenses within the family. It is the process of foreseeing the financial future of the family and managing the person’s estate after his demise. An estate plan can reflect integral parts of your life and life principles. Here are a few prominent examples of the policy outlines that characterize estate planning commonly –
- Some people engage in charity frequently. You are likely to find more charitable actions in their estate plans.
- You may want to gift your children with certain parts of your inheritance. An estate plan can determine how much is enough for all of them.
- There are times when one child is more interested in the family business than the others. In such cases, equal is not fair. Having an estate plan can differentiate “Fair” from “equal.”
Having an estate plan determines who gets parts of which asset. This includes your car, beachfront property, townhouse, city apartment, and even your golf clubs! You can mention the specifics of your inheritance and their beneficiaries in great detail in your estate plan.
Interestingly, not many potential holders know that an estate plan can help your children and grandchildren make decisions on your behalf. It can bestow a power of attorney on the one you deem fit for the responsibility. Any decision regarding your health, access to medical records and healthcare directives find a solution in the estate plans.
Final reasons to get a survivorship insurance plan
Many people do not understand the importance of a second to die policy in their lifetime. Here are a few more reasons you may want to consider including life insurance within your estate plan:
- You want to transfer wealth to your children yet save tax.
- You want to pay taxes, school/college fees, business decisions, and estate expenses even after you are gone.
- You have a special needs child who needs lifelong financial support and care.
- You are looking for a tax-deferred investment policy that can boost your death benefit.
- You want to leave assets that are equal AND fair for the next generations.
A survivorship policy can help you smoothen your worry-lines. This plan can take care of your taxes, defer your death taxes and offer a smart investment opportunity. It is time to see the brighter side of life and going for a rewarding policy.
Author: Isabella Rossellini