One excellent use for life insurance in the area of estate planning is to cover estate expenses. Typically, even a small policy can aid here. The policy pays out on the decedent’s death, and provides a quick lump-sum payment to heirs to fund many expenses, including:
- Estate, income, and capital gains taxes
- Real estate payments, such as mortgages
- Real estate transactions, such as home sales
- Commissions for liquidating assets (stocks, bonds, etc.)
- Cash to sell or run a business
- Cash to pay off business loans or personal debts
- Court costs and other legal fees
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