Helping Create Liquidity and Flexibility for Your Legacy Plan
For many families, life insurance starts with a simple purpose: helping protect loved ones if income unexpectedly stops. As wealth grows, it can also become a valuable planning tool—providing liquidity and flexibility when your family may need it most.
This can be especially important when family wealth is held in a business, real estate, concentrated stock or other assets that may take time to sell. Without ready access to cash, heirs may be forced to sell valued assets at an unfavorable time to cover taxes, expenses or other obligations.
Life insurance can help address that challenge. It may provide a reliable source of cash that is not dependent on market conditions or the timing of an asset sale. In many cases, premiums paid over time can help create a leveraged death benefit for beneficiaries, generally with favorable tax treatment.
It is natural to compare life insurance with other investments, but the comparison is most useful when it focuses on purpose. Stocks and other growth assets are typically designed to build wealth over time. Life insurance is designed to provide a known amount of cash at an unknown future date (upon death)—offering certainty when liquidity matters.
A family’s net worth may look strong on paper, but taxes, debts, professional fees and ongoing needs are usually paid in cash. When much of an estate is illiquid, meeting those obligations can be difficult. Life insurance can help provide the time and flexibility for a family to make thoughtful decisions instead of selling important assets under pressure.
Life insurance proceeds are generally received income-tax-free, but the death benefit will increase the size of the estate if owned by an individual. If an estate is at risk of being subject to federal or state estate tax, life insurance can be held in a special trust called an irrevocable life insurance trust, to keep the proceeds out of the estate for tax purposes.
Every family situation is different, and not all need a permanent life insurance plan. But for families with significant assets, especially when they are illiquid, life insurance can be a valuable way to provide tax-free, liquid dollars to the next generation. Contact your Benjamin F. Edwards Financial Advisor to review your current estate plan and insurance policies to ensure your wealth transfer goals can be achieved.esearch Association)
IMPORTANT DISCLOSURES: The information provided is based on internal and external sources that are considered reliable; however, the accuracy of this information is not guaranteed. This piece is intended to provide accurate information regarding the subject matter discussed. It is made available with the understanding that Benjamin F. Edwards is not engaged in rendering legal, accounting or tax preparation services. Specific questions on taxes or legal matters as they relate to your individual situation should be directed to your tax or legal professional.
5964510 EXP: 09/30/2029