Life Insurance and Estate Planning in Connecticut

Many people are not aware of the benefits of life insurance when it comes to estate planning. The following will explore some of the uses of life insurance that are often overlooked.

Common Uses for Life Insurance in Estate Planning

  1. Income Replacement - life insurance can be a key tool for replacing income of a spouse in the event of their premature death;
  2. Asset Protection with Trusts - life insurance when utilized in conjunction with a properly drafted Irrevocable Life Insurance Trust can shield assets from frivolous lawsuits, and provide protection for loved ones;
  3. Wealth Equalization - in the case of business owners, life insurance can be used to equalize an inheritance in the event that one child is better equipped to run and own the business. Many parents/business owners do not want to cause fights when leaving an inheritance to the kids, but they also don't want to have their business run into the ground by a child who inherits a portion of the business. Life insurance can provide the means to ensure that the inheritance received by each child is equal without forcing a child into the ownership of a business that he or she doesn't want and/or isn't equipped to help run;
  4. Special Needs Planning - life insurance can be an excellent tool for use in conjunction with a supplemental needs trust for a child who may need needs-based governmental assistance;
  5. Liquidity to Pay Debts - life insurance provides a means for paying off the debts of the spouse who passes away (e.g. the mortgage) so that the surviving spouse can have funds available to service that debt during a time of grief. It can do this while avoiding probate in Connecticut with a beneficiary designation that doesn't result in the death benefit directing going into the probate estate.

These are just some of the uses of life insurance in estate planning. We do not sell insurance at Massih Law, LLC, but we work closely with professionals who do, and would be happy to make a referral, or work with your insurance professional to ensure that your estate planning needs are being met. Feel free to reach out to us if you have any questions at (203) 651-5521.