Life Insurance for Estate Planning
How is life insurance used in estate planning?
Life insurance is a powerful estate planning tool. It can be used to: pay estate taxes, equalize inheritance among heirs, fund a charitable bequest, and provide liquidity for illiquid estate assets. An irrevocable life insurance trust (ILIT) can keep the death benefit out of the taxable estate.
Key Points
- Pay estate taxes: life insurance provides liquidity for estate taxes
- Equalize inheritance: life insurance can equalize inheritance among heirs
- Charitable bequest: life insurance can fund charitable giving
- ILIT: keeps death benefit out of the taxable estate
- An independent agent can help you design a life insurance estate plan