When you pass away, life insurance protects your loved ones against financial expenses. In addition, it can help survivors pay for the estate taxes of a deceased family member. Some survivors may not be aware of the benefits and strategies they can implement to maximize such advantages. For a breakdown of the role life insurance plays in estate planning in New York, please continue reading, then contact an experienced Putnam County estate planning attorney today. The following are some ways that life insurance can help with estate planning in New York:
Can you use life insurance to pay estate taxes?
By having a life insurance policy, you provide your survivors with a great means of paying estate taxes. The federal estate tax applies to the gross estate of the deceased and someone attached to the estate must pay those federal estate taxes within nine months after the death of an owner. New York does impose an estate tax but the state does not tax the proceeds of life insurance.
Can life insurance cover business assets?
Choosing universal life insurance gives you access to an investment savings component. Depending on the terms of your policy, you can also borrow the cash value as a financial cushion in case your business encounters difficulties. Furthermore, life insurance can serve as collateral for a business loan or fund a buy-sell agreement. Buy-sell agreements set prices and terms that surviving partners must follow to purchase the shares of the deceased or leaving partner. Surviving owners will receive death benefits, and your family will receive payment for your interest in a company if you die.
Does life insurance provide faster payouts?
Liquidating assets can take time, which may make it difficult to pay expenses related to the death of a person, including:
- Funeral and burial costs
- Possible debts and taxes
Survivors can claim the Death Benefit of a life insurance policy immediately, which will prove useful when paying out such expenses and reducing the financial burden of a death on your family.
How does life insurance help you prepare for the future?
As the owner of a policy, you have the option to choose how the executor will use the proceeds of your insurance. For example, even after you pass, you can continue supporting a loved one, such as:
- Aging adults
- Children with disabilities
Others may use it to continue alimony or child support payments or fund a trust for another purpose. With the latter, you can hold assets on behalf of your beneficiary under the supervision of a trustee.
Speak with Andres D. Gil, Esq. if you have any further questions.
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If you or a loved one needs assistance creating an estate plan, contact the Law Office of Andres D. Gil, PLLC today.