Creating an estate plan is very important, without one, the state of Ohio’s intestacy laws will determine how your assets are distributed. There are many tools available to ensure your money, property and personal items are distributed to the appropriate parties designated in your estate plan. Life insurance is one of them.
Here’s why you should consider treating your life insurance as part of your estate plan:
- Final expenses: Funeral expenses average $7,000, which can be burdensome for many families. Plus, your estate is responsible for paying your debts and final income taxes. Having a life insurance policy can help cover these expenses while the estate is settled.
- Estate taxes: While the state of Ohio does not levy estate taxes, the federal government does. If your estate is worth more than $12.92 million in 2023, it may be taxed unless it qualifies for an exemption. Life insurance proceeds help offset the cost of estate taxes, so your beneficiaries don’t have to liquidate assets to pay them.
- Equalization: Sometimes assets are difficult to split up, particularly when you have several children and real estate assets. One child may want to sell the property, while another may wish to keep it—but cannot afford to buy their siblings out. The life insurance proceeds can help to equalize the estate so that all children can have what they want.
- Avoid probate: Most people want to avoid probate whenever possible. It can take months, if not years, to settle an estate. Since life insurance proceeds are paid directly to the named beneficiaries, they bypass probate. This is especially helpful to ensure your dependent family is supported until the rest of the estate is settled.
- Special purpose: Finally, a life insurance trust can be earmarked for special purposes, such as paying child support, supporting family members with special needs, supporting minor children until they reach 18 and more.
Your life insurance policy is more important than you may realize. Consider it part of your overall estate plan. With the help of a skilled estate planning firm like James Bart Leonardi, LLC, you can create a plan that supports your loved ones, and ensures your assets are distributed appropriately. Call us today to schedule a consultation.