Estate Equalization for (Step) Families

Estate Equalization for (Step) Families

Estate Equalization for (Step) Families

Dividing your estate and distributing it fairly amongst the surviving members of a blended or a stepfamily can be a challenging task. Done improperly, it can cause dissatisfaction and family conflict, mismanagement of your assets and your business, and more.

In many cases, liquidating your assets might be an option you consider, but probably not a lucrative one. That’s where Life Insurance can help. Your Life Insurance Policy can help to equalize your estate and leave behind a fair share to all your inheritors. 

The Case 

Ashish Shivdasani, a successful business owner, is 62 years old and worth US$ 80 million. A few years ago, Ashish’s wife passed away, leaving behind Ashish, and their son, Nithin, 29 years old. 

A couple of years ago, Ashish met someone and decided to remarry. His second wife is significantly younger than him and is now pregnant with their first child together, and the second heir to Ashish’s estate. 

Ashish starts to prod the big question: what happens after he is gone? He begins to evaluate how he wants to distribute his estate so that all his surviving family members are left with fair shares. 

The Challenge 

Nithin, Ashish’s son, does not play an active part in the business, nor does he want the responsibility of running and managing Ashish’s property and investment portfolios. He does, however, want to retain his lifestyle and all the comforts and luxuries that he is used to. 

In order to make that happen, Ashish would need to liquidate a part of his estate while still leaving control of the business and some of his assets to his second wife and their child. She has, after all, shown an active interest in the business, is entrepreneurially inclined and he feels certain she is capable of managing the money. 

How Life Insurance Helped

Instead of liquidating his assets to leave behind the money to support his son’s lifestyle, Ashish was advised to buy a life insurance policy. He bought a policy worth the value of his entire estate – US$ 80 million (since he had the income to justify that level of cover) put the whole thing in a Life Insurance Trust, and named Nithin the beneficiary of the proceeds of the policy. 

This way, Ashish had managed to find a solution that:  

  • Removes any reason for conflict about who was left with the larger inheritance 
  • Gives his son his wish – the money to continue to support his lifestyle, without the business and estate management responsibilities 
  • Leaves his assets and his business to his wife, undisturbed
  • Essentially doubles his estate, without having to liquidate any of his assets 

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