Many people automatically think about funeral costs, but it’s much more than that.
There are other costs that may need to be addressed, and by planning ahead, you can help secure the financial future of your loved ones while easing the burden of their loss.
Three major final expenses that may need to be addressed immediately following death are: estate taxes, probate and legal fees.
Let’s take a closer look at each:
- Estate taxes
The federal estate tax is a tax on the right to transfer property at death. An estate tax return, if required, must generally be filed within nine months after the decedent’s death. Tax rates on estates are among the highest in U.S. tax code. On average, the rate is less than 17%, but can be as high as 40%.1
Probate is the legal process of taking inventory of the deceased’s estate, fulfilling final obligations to creditors or claimants and distributing the remaining assets to beneficiaries. People try to avoid probate because it can be long and costly. One way to avoid probate is to use retirement planning vehicles that aren’t part of the public probate process, such as annuities and life insurance policies. These pass to properly named beneficiaries without being subject to the costs and delays of probate.
- Legal fees
In some states, attorney and court fees related to probate can take up to 5% of an estate’s value.2
How to cover these expenses
If you’re worried about how to cover these expenses—while still being able to leave a legacy for your loved ones—consider a life insurance policy. The benefit from a policy is available upon proof of death and can be used to cover any immediate final expenses and help you leave your legacy.
Ready to learn more? Get in touch with an agent/producer today!
1Center on Budget and Policy Priorities, Ten Facts You Should Know About the Federal Estate Tax, https://www.cbpp.org/research/federal-tax/ten-facts-you-should-know-about-the-federal-estate-tax, October 30, 2017.
2Forbes, Probate, Wills, Executors: Your Estate Planning Questions Answered, https://www.forbes.com/sites/nextavenue/2017/04/07/probate-wills-executors-your-estate-planning-questions-answered/#399ebf873250, April 7, 2017.
The Company and its producers do not provide legal or tax advice. Each individual should seek specific advice from their own tax or legal advisors. The general and educational information presented in this material is a sales and marketing piece for insurance products offered by Bankers Life and Casualty Company.