Why life insurance is such an important part of estate planning

Estate planning is all about securing your assets and finances to help support and protect your loved ones in the event of your passing. Life insurance is another means to the same end, supporting and protecting your loved ones. But is life insurance a necessary part of estate planning? Expert attorneys in New Jersey say: Yes.

Firstly, this is because a life insurance policy increases the size of the estate you’re leaving to your loved ones, directly providing them with more financial protection. It also benefits your loved ones in that many policies cover some or all funeral costs. Further, in the event of an unexpected death, the money can help fulfill any unplanned financial obligations.

Secondly, life insurance usually pays out much more quickly than an inheritance when an individual is named as the beneficiary, helping your family and dependents to continue to meet financial obligations while your estate is settled. Naming your estate as the beneficiary, however, will mean the money goes into the estate itself and will be tied up until probate is concluded.

Thirdly, life insurance policies are highly beneficial to estates that include a business, especially if the business is being left to a family member. This way, you can use your life insurance policy to ensure your heirs benefit more equally from your estate.

And lastly, insurance policy payouts are generally income tax-free, helping your heirs to avoid potentially costly inheritance taxes. In fact, you can also help ensure it does not affect your estate tax as a whole by either ensuring your spouse is the beneficiary, or by making the policy part of a trust known as an irrevocable life insurance trust, which is something an experienced estate planning attorney can assist you with. This is especially important for estates that exceed the limits for both federal and New Jersey estate taxes, which are subject to change from year to year.

An estate planning attorney such as SCC Legal,  can help you set up this trust and name your chosen beneficiaries of the trust – not the policy – and the trust will then purchase your life insurance policy. If you pass away, the trust then becomes the beneficiary of your policy and will receive the money paid out by the insurance company. The beneficiaries of the trust will then receive the payments directly through the trust agreement. This means the proceeds of your policy are not counted as part of your estate and are therefore not subject to estate taxes.

At Sedita, Campisano & Campisano, LLC, we can offer you over 30 years of estate planning experience to give you complete peace of mind. For more information on estate planning in New Jersey, please contact us today.

Your Estate Planning Guide to Creating, Changing or Revoking Your Will in New Jersey

Creating or changing your Last Will and Testament can seem complicated, but it can be handled easily if done through experienced New Jersey estate planning attorneys. Here’s a guide to understanding the different elements that go into this important legal process.

It is important to remember that a Last Will and Testament isn’t just for the wealthy, it’s for anyone with any assets they would like to pass on to specific people or anyone who would like to ensure their dependents are financially protected. This document also allows your estate to avoid the often lengthy and costly probate process.

Creating a Last Will and Testament

In New Jersey, anyone 18 or older who is of sound mind may create a Last Will and Testament. “Being of sound mind” generally means you have not been declared incompetent in a previous legal proceeding.

The first thing you need to decide is to whom you would like to leave your assets. Some of these choices may be sentimental in nature, where you would like to leave something memorable to someone specific. Other choices are generally centered on giving family and dependents financial protection. It’s important to keep in mind you can also donate to charities and organizations close to your heart.

You will also have to specify an executor of your Will who will be responsible for ensuring your assets are distributed according to your wishes. While this person can also be a beneficiary, it is often recommended that you choose someone independent who has a background in legal and business proceedings and can easily navigate this process.

You can, at any time you would like to, change details of your Will, add dependents or revoke it entirely.

In addition to your Will, it’s important to consider a Living Will (or healthcare proxy) and Power of Attorney. These two documents will ensure your medical care and financial choices are carried out as you wish should you be in a position where you are unable to give consent.

In conclusion, creating a Last Will and Testament gives you peace of mind – and by putting it in the hands of a leading law firm like Sedita, Campisano & Campisano, LLC, you can rest assured that your health, assets and loved ones will be taken care of the way you would like. For more information on setting up or changing your Will, please contact us at the law firm of Sedita, Campisano & Campisano, LLC today.

Call Now