As we mentioned in previous articles, estate planning is the process of accumulating and disposing of wealth before death of an individual, or estate owners including married couple.
It's aim is to maximize the wealth of the estate owner.
I.
Life insurance The most important goal of estate planning is to make sure that the greatest amount of wealth is passed to the estate owner's intended beneficiaries while paying the least amount of taxes.
Life insurance plays an important role in state planning because life insurance is tax-free on hand of beneficiaries upon the death of the insured.
II.
How it works 1.
The proceed from the life insurance can be used to pay off any probate, taxes, and fees that normally have to be paid by your estate.
2.
Under universal life policy, growth of assets in your life insurance policy is tax-free.
The proceed of life insurance plus fund values will be not be taxed on hand of your designated beneficiaries and it can be used to pay off the debts of your estate.
3.
While you are alive, the fund values that are not registered can be withdrawn anytime.
Funds that are registered can provide you with additional income when your retire.
Since the funds can be withdrawn, it gives some security in case of emergency.
4.
Life insurance in a group plan.
Not only can it enhance employee benefit package and provide coverages to protect against loss due to the death of a business partner, it can also be used as a strategy to minimize corporate taxes.