A large number of marriages do not last. Not only is the ensuing divorce process emotionally challenging, but it also introduces many stressful challenges. One often overlooked complication that many people must navigate during this time involves estate planning. One particularly helpful strategy that can be utilized during this time is obtaining life insurance. The following will take a brief look at some of the benefits that people realize through the use of life insurance during this difficult time.
Provide Funds for the Divorce Process
If a divorce involves hostile partners or includes child custody issues, the process can take an extended time. During this time, it is common to incur several fees. If you have an established life insurance policy, it is possible to take withdrawals or loans from the policy’s cash value to pay for these expenses. If the policy is designed effectively, clients will not be required to liquidate other assets or pull money from an estate that would have been passed on to beneficiaries.
Protect Your Income After a Divorce
It is common to discover that your income substantially changes after a divorce. To help the lower-earning spouse transition to life after divorce, courts award alimony payments. If the spouse who passes away is unable to pay these costs, however, the loss of income can cause a substantial amount of stress for the recipient. Life insurance that is paid for by the paying spouse, however, can compensate for these lost payments.
Preserve Assets After a Divorce
If a person has children from a previous marriage, it often makes sense to provide for these individuals through life insurance. In other situations, a person might decide to provide for the new spouse through life insurance while the children receive another type of asset. In either case, the funds from life insurance are often substantial assets that can be passed to a loved one and subsequently reduce a great amount of stress.
Assets from life insurance can then be used to make sure that a person’s child receives adequate care. Most often, these assets are used to pay for things like college or medical expenses.
Contact an Experienced Estate Planning Lawyer
Even though life insurance can play an invaluable role, there are numerous questions to answer when deciding how to make life insurance part of your plan. For example, many people are not sure whether they should choose life or term insurance. While term life insurance is often less expensive, permanent insurance has the potential to accumulate a cash value that can be drawn from the policy while the spouse is still alive. Sometimes, it is a good idea to add riders to customize a life insurance policy. Because divorce is such a common occurrence, a growing number of clients have the potential to benefit from these policies. If you need estate planning assistance during this difficult time, do not hesitate to speak with a knowledgeable estate planning attorney like Jim A Lyon.