Life Insurance as an Effective Estate Planning Tool

Life insurance is an often overlooked tool in estate planning — especially in today’s world where people are marrying more than once and joining families in a Brady Bunch fashion. Life insurance proceeds can offer benefits such as income protection for a current partner while still providing for children from a prior relationship, estate equalization for children from a current relationship while protecting assets for children from a prior relationship, asset equalization, including ex relationships in your estate plan privately, and security for court ordered obligations.

If you have already obtained assets before you enter into a new relationship, it is likely that you already allocated certain assets to certain people. Life insurance can be used to provide for a new partner without impacting the allocations that you have already designated. You can similarly provide for children of a new partnership while protecting the assets of children from an old partnership with life insurance proceeds. Since child support ends at the death of the obligor, if some parents want to provide for children from an old partnership after death, life insurance can aid in that effort.

See Andrew I. Shapiro, “Brady Bunch” Style Estate Planning, The Wealth Channel Magazine.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.