Second-To-Die Life Insurance Policy
If death occurs, how will the estate taxes on your Company's value be paid by your estate? Your business is a high-value, non-liquid asset. (An asset that cannot be converted to cash easily.) If one spouse dies and the assets go to the other spouse, there are no estate taxes due. However, when the surviving spouse dies, a huge tax liability will probably be due. Consider obtaining insurance coverage to provide for these estate taxes so the business' value can be preserved. Otherwise, the second spouses' estate may need to sell the business in a "fire-sale" for a fraction of its true value. The most popular and least expensive way to buy this insurance is through a "second-to-die" policy. This policy only pays off when the second spouse dies. IMPORTANT: Neither spouse can own this policy or it will go into the estate of the second-to-die. The policy must be in the name of an heir or trust, which must also pay the policy premiums. However, you can gift cash to cover the premiums each year.