The Role of Life Insurance in Estate Planning in Florida

Creating a sound estate plan provides not just security for your family and loved ones after you die, but peace of mind for you while you are alive. While you may have thought about your will, creating a trust, avoiding probate, and other aspects of legacy preservation, are you also aware of the role life insurance plays in your overall estate plan?

Here are some of the benefits of life insurance in estate planning:

      • Pay estate taxes — Federal estate taxes must be paid within 9 months of your death. Unless your estate has lots of liquidity, estate assets may have to be sold to pay federal estate taxes. Unfortunately, some assets like businesses, real property or deferred retirement plans may be difficult to liquidate in such a short period of time. A life insurance payout can provide your heirs with the needed cash to pay federal estate taxes.
      • Relieve immediate financial burden — Distributing assets after your death, even with an estate plan in place, can take time. Funeral costs, business and personal debt, and estate taxes can put a strain on your family and force them to pay out of pocket or even liquidate their own assets. Proceeds from a life insurance policy can provide immediate cash flow to handle such financial burdens while your heirs wait for the distribution of your estate.
      • Tax-free — A life insurance policy provides income tax-free benefits for your loved ones. Think of your policy as a “mini” estate plan. Although the proceeds of a life insurance policy avoid income tax, they will be included as part of your total taxable estate. As a result, you may consider the purchase of life insurance in an irrevocable life insurance trust.
      • Avoids probate — The beneficiaries of a life insurance policy receive the proceeds outside of probate. This can be helpful for the purpose of generating immediately available cash for the beneficiaries or for estate liquidity.

Whether you are new to estate planning or are looking to update an existing document, you should consult with an experienced wills and trusts lawyer to ensure you have a comprehensive plan for your heirs and beneficiaries.

Irrevocable life insurance trust

Creating an irrevocable life insurance trust can provide numerous legal and financial benefits to heirs, including advantageous tax treatment and protection of assets. The irrevocable life insurance trust is unique in that it acts as both the owner and beneficiary of a life insurance policy.

Contact trusted Florida estate planning attorneys

At the Law Offices of Hoyt & Bryan, LLC, our legal team works diligently to help you craft a comprehensive estate plan that ensures your last wishes are realized. Call (407) 977-8080 or contact us online at to discuss your estate planning matter with an experienced attorney today. We have office locations in Oviedo and Altamonte.

Peggy R. Hoyt - The Law Offices Of Hoyt & Bryan
About the Author: Peggy Hoyt
Peggy R. Hoyt practices in the areas of family wealth and legacy counselling, including trust and estate planning and administration, elder law, small business creation, succession and exit planning, real estate transactions and animal law.