Planning For Incapacitation Insurance is Vital!

Posted by Winifred "Wini" Cannon | Oct 06, 2020 | 0 Comments

We're back and now we're going to talk about insurance. I do not profess to be an insurance agent, but I tell you, you need to have a great insurance agent in your pocket or on your Rolodex or on your speed dial or on your contact list. Because most of what I'm discussing is about financing your future through insurance products. So you certainly can buy term life or whole life insurance to cover buyouts. You can use short term, disability income products. You can use a number of tools to finance your business succession plan.

 

Using Insurance to Fund Will

Oftentimes people use insurance to fund their will. Say, for instance, a person hasn't accumulated $100,000, but if they have a life insurance policy and they may want to on the policy, designate who the beneficiaries are. But say if you have minor children and you could put their names down there as the beneficiaries, but you could also put a contingency beneficiary if they are minors then you want it to be paid to your estate. And then in your will, you can set up trust provisions for the distribution of that money to those children. Otherwise, they would have to wait until they're 18 years old to get that money. And say, if you have a larger insurance policy, you may not want them to plow through all of that money at the age of 18. So depending, you may not want them to have $100,000 at 18.

 

Planning Ahead: Dealing With Minors

But what I suggest to you is that you could use insurance to fund the bequest that you would want to make under your will. Such that the person you got to designate an executor under the will and they're going to use their letters to go and get that money from the insurance company. And they're going to have it paid into the estate account. And in that will, you got to also have provisions that if your children are still minors, that you're going to appoint a trustee and then you've got to give trust instructions as to how the person will make distributions.

This is a better way of doing things as opposed to having a child petition a court if there is something that they need and/or they need the money before they're 18. At least if you do it that way, some monies can be readily available to them, but you can set that up however way you wish to. But it's just an idea, a recommendation as to how you can finance, how you can bring finances into your estate so that there can be money for distribution. Thank you always for listening.

About the Author

Winifred "Wini" Cannon

Winifred “Wini” Cannon knows how business owners may be impacted when retirement, incapacity, or death occurs without a good plan in place. One example that is very common is in the instance where one partner dies leaving the other trying to stay in business complicated by the...

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