From creating a will to establishing a revocable trust, there are many tools and options available to individuals creating a Houston estate plan. However, many people are unaware of the role insurance can play in an estate plan, especially for small business owners. Many estate planning attorneys will advise their clients to obtain life insurance, if they do not have it already, when planning ahead for their future. Besides merely obtaining insurance, there are vital steps business owners should follow when creating an estate plan.
Why Purchasing Life Insurance is Vital
Nothing can replace the loss of a loved one; however, having insurance can help soften the financial blow if tragedy strikes. If the loved one was an owner of a business and the family is looking for someone else to purchase the company, an insurance policy can allow the family to take the time to transition the company during a new period of leadership. Without life insurance during this time, the family would be a majority owner in a business they do not want to run and, often, requires a more experienced person to lead.
Who Should Be Named as a Beneficiary
When deciding on a life insurance policy, business owners are often advised to name their company as a beneficiary. This gives the company the ability to remain open by using the policy to pay its bill and employees. If the company is not named as a beneficiary, it becomes more difficult for funds to be used for business expenditures and could lead to the company’s closing.
When the business is co-owned, another strategy is to name the other owner as a beneficiary on each other’s life insurance policies. When one of the owners passes away, this provides the other business partner with the funds to purchase the other half of the company, should the deceased’s family want to sell their share. This is called a cross-purchase agreement and is common in many business partnerships.
Insurance for Non-Business Owners
Life insurance can play an essential role in estate planning, even for families who do not own a business. Insurance policies that provide overall coverage, such as personal liability or asset protection, are extremely beneficial and prepare families for anything that may occur in the future. While obtaining these forms of insurance may seem unnecessary, planning for such situations can assist a person’s family while they are recuperating both financially and from the devastating loss of their loved one.
Because insurance and estate plans can often be complicated, it is critical, especially for business owners, to consult an experienced estate planning attorney when thinking about their future or the future of their company.
Are You or a Loved One Interested in Amending Your Estate Plan?
If you or a loved one needs an estate plan updated, or are interested in creating an estate plan, contact the dedicated Houston estate planning attorneys at McCulloch & Miller, PLLC. Because each estate plan is unique to the person and their situation, our skilled attorneys will take the time to review your options and create the estate plan that works for your needs. Call our office today at 713-333-8900 to schedule a free consultation.