Posted by Ralph Sklar @ 1:00pm on July 18, 2015
One of the most common uses for life insurance is to equalize bequests when the estate is made up largely of one illiquid asset. Frequently we see a business owner who wants to treat all of his children equally, but is perplexed as to how to accomplish this when some children work in the business and others do not. Giving part of the business to the children who work in the business and the rest to siblings who have embarked upon other careers is not likely to make anyone happy and can ruin both the family and the business. Leaving the business to the children who work in it, and life insurance to those who don't is one solution, but even that might not create family harmony because often the child who gets the business would prefer the cash. An alternative is to leave the business to all of the children and let the children who work in the business acquire the life insurance themselves so that they will have cash to buy out their siblings if they want. There is no right or wrong, but we like to help our clients to think through their options.