How does life insurance help business owners with estate planning in Nevada?

For Nevada business owners, life insurance serves multiple estate planning functions simultaneously. A closely held business is typically the owner's largest asset—and the least liquid. Estate taxes assessed on business value may force heirs to sell the business to pay the tax bill within nine months of death without proper planning.

Life insurance provides the liquidity solution. A policy owned by an ILIT can fund estate taxes without touching the business assets. An entity-owned buy-sell agreement funded by life insurance ensures business partners or key employees can acquire the deceased owner's share at a predetermined value, providing immediate liquidity to the estate.

For family businesses, life insurance can serve the equalization function—business-active heirs receive the business while non-active heirs receive life insurance proceeds of equivalent value. This prevents the common problem of joint heirs who disagree about business operations.

Section 6166 of the Internal Revenue Code allows estates with qualifying closely held business interests exceeding 35% of the gross estate to pay estate taxes in installments over 14 years. Life insurance can complement this provision by funding installment payments. Coordinate with a licensed agent and business attorney for comprehensive planning.