How life insurance can be an important part of your estate plan

Life insurance can be an important part of an estate plan.

When preparing your estate plan, it is important to look at life insurance. This is especially true for younger families because life insurance is relatively inexpensive and can provide income for your family if you pass away.

Here is one example. A young couple has a child. They decide to put together an estate plan, and their primary concern at that time is to provide for their child if something should happen to them. One way to make sure their child is taken care of is purchase term life insurance and make their trust the beneficiary. In the trust document, whether it is a testamentary or living trust, the couple can appoint guardian(s) for their child, and fund the trust with the life insurance proceeds to provide for their child’s health, education and welfare, if the unthinkable happens to them.

In another example, life insurance can be used to fund a trust for a disabled spouse. Again, you can fund a revocable or testamentary trust with the life insurance to provide for a disabled spouse after the caregiver passes away.