Using Life Insurance to Strategically Plan Your Estate Post-Divorce
As estate planning attorneys here in Florida, we frequently encounter clients who are going through or contemplating divorce, we regularly receive questions regarding whether or not there are particular estate planning choices that can help protect families and divorcees. For some clients, life insurance can help address some of these concerns, and you can develop an estate plan that truly fits your unique needs and circumstances, as we describe below.
How Life Insurance Helps During & After Divorce
- Life insurance policies can help pay for a number of needed divorce-related expenses, such as attorney’s fees, and help clients avoid having to liquidate other assets or pull from other funds that they would rather be handed down to beneficiaries.
- In addition, if alimony payments are paid after the divorce, but the payer passes away, this can leave their dependents in a precarious position. However, life insurance can help fill that gap and provide that lost income for dependents.
- Life insurance also allows clients to take withdrawals or loans from the policy tax-free; allowing them to use those funds to pay off existing debt, which can eliminate the need to dip into other assets that would otherwise go to their heirs.
- Life insurance can also be helpful when it comes to some blended families in terms of allowing families to split up assets when it comes to children from a previous marriage, a current spouse, etc. For example, it may make more sense to provide life insurance to some individuals and assets to others. This can sometimes prevent bad feelings between family members after a decedent passes.
- Life insurance policies can also help fund college or provide other expenses for children, especially if one spouse who was covering a majority of these expenses passes away, or even during someone’s lifetime if funds are not otherwise readily available.
What You Need to Know for Your Customized Estate Plan That Utilizes Life Insurance
In creating a customized estate plan that fits your particular needs, there are several factors to consider, such as:
- Whether you want permanent or term insurance: Permanent insurance, although more expensive, has the potential to accumulate value that not only feeds into a death benefit, but which can be drawn from during the holder’s lifetime.
- Long-term care riders tacked onto permanent life insurance allow for certain benefits to be accelerated and accessed during the holder’s lifetime, such as paying for nursing home care, for example.
Contact Our Florida Estate Planning Attorneys to Find Out More
Many people find that a carefully designed life insurance policy provides tax-efficient cash growth and assistance in terms of replacing lost income, alimony, and other funds to help pay for necessary expenses, such as medical and/or college expenses. If you have any questions about estate planning here in Florida, contact our experienced Orlando estate planning attorneys at the office of Gierach and Gierach, P.A. today to schedule a consultation and find out more about how you can strategically customize an estate plan that provides for you and your family as you see fit.
Resource:
insurancenewsnet.com/innarticle/5-ways-life-insurance-eases-post-divorce-estate-planning#.XcI0vDNKiM8