When you’ve spent years building a life—growing your wealth and raising a family—you don’t want to leave the next chapter up to chance. Estate planning protects the people you care about and keeps your legacy intact.
But have you considered how your heirs will handle estate taxes or other costs when you’re both gone?
Survivorship life insurance covers two people—usually a married couple—and pays out after both have passed. The delayed payout makes it an effective estate tax planning tool, giving heirs funds to cover taxes and preserve your legacy.
If you’re married and own significant assets, such as real estate, investments, or a family business, survivorship life insurance may be the missing piece in your estate plan.
At Marinaccio Law, we help families across the San Fernando Valley use survivorship life insurance in estate planning to support their goals and carry forward what they’ve worked hard to build.
What Is Survivorship Life Insurance?
Survivorship life insurance (also called second-to-die life insurance) covers two people under one policy—typically a married couple. It doesn’t pay out when the first person dies. Instead, the benefit comes after both people have passed.
Why does that matter? Because most estate costs—like taxes, legal fees, and final distributions—come due after the second person dies. Without available cash, heirs may have to sell property, investments, or a family business to cover the cost.
Unlike regular life insurance, which typically helps cover debt, survivorship policies act as a wealth transfer strategy. They give beneficiaries what they need to pay expenses and keep what you intended to pass down.
Benefits for Estate Planning
When considering life insurance for estate planning, you need a policy that supports your long-term objectives. Second-to-die coverage offers specific advantages, making it an excellent option for high-net-worth estates.
Survivorship policy benefits include:
Lower Premiums Than Two Policies
Because survivorship life insurance pays out after both parties have passed, the insurer takes on less immediate risk, resulting in lower premiums. This allows high-net-worth couples to secure substantial coverage while allocating resources to other legacy planning strategies, such as trusts or lifetime gifts.
Liquidity When Other Assets Aren’t Accessible
Even wealthy estates can struggle with cash flow. Property can take months to sell, and liquidating investments may trigger penalties or losses. Survivorship life insurance provides funds when they’re needed most—after the second death, when estate expenses hit.
Preserves Planning Flexibility for Heirs
Survivorship insurance gives heirs breathing room. Instead of rushing to sell a home or take on debt to pay taxes, they can follow your plan—whether that means funding a trust gradually, holding property until the market rebounds, or keeping a business running.
Addresses Unequal Interests in Blended Families
When spouses have children from previous relationships, dividing assets can get complicated. Survivorship life insurance creates a separate pool of funds for specific beneficiaries, without changing how other assets are owned. This helps avoid conflict and keeps distributions clear.
Tax Efficiency in Estate Planning
In addition to general benefits, survivorship life insurance offers tax advantages, especially in high-value areas like Los Angeles County. California doesn’t have a state-level estate tax, but many families are still subject to federal estate taxes.
If your estate is worth more than the IRS exemption threshold, your beneficiaries will need to file a federal estate tax return upon inheritance. Anything over the exemption is taxed at between 18% and 40%.
Survivorship life insurance helps in two ways:
- It creates a tax-free payout your heirs can use to cover tax liabilities—without selling real estate, liquidating investments, or taking on debt.
- The policy can be owned by an Irrevocable Life Insurance Trust (ILIT), which keeps the death benefit outside your taxable estate.
With the federal exemption expected to drop from $27.98 million for married couples in 2025 to $7 million per person ($14 million per couple) in 2026, planning ahead is more important than ever.
Creating a properly structured policy can give your beneficiaries the liquidity they’ll need, without compromising what you intended to pass on.
See It in Action: Real-Life Scenarios
What does survivorship life insurance look like in practice? Here are some examples of how California couples use it to transfer wealth to the next generation:
Example 1: Estate Tax Security for a Wealthy Couple
Maria and Antonio, a married couple in Sherman Oaks, have a $10 million estate that includes their primary home, a vacation property in Mammoth, and several investment accounts.
While their estate doesn’t exceed the current federal exemption, they’re concerned about the upcoming 2026 reduction and the impact it could have on their children.
To prepare, they purchase a $3 million survivorship life insurance policy with the help of their estate planning attorney and place it in an ILIT.
The death benefit will give the children liquid funds to pay future estate tax, keeping the properties and accounts intact.
Example 2: Blended Family Fairness
Rebecca and David each have children from previous marriages. Their estate includes a shared home, rental properties, and a family trust, but they worry about keeping things equitable without causing tension between households.
The couple purchases a $1.5 million survivorship policy and directs the payout to a trust for David’s children, giving them a dedicated inheritance. The rest of the estate, managed through their main trust, goes to Rebecca’s children and any shared heirs.
The result is a transparent plan that respects both sides of the family.
How Survivorship Insurance Fits Into a Broader Estate Plan
A survivorship life insurance policy isn’t a stand-alone solution—it works best as part of a broader estate plan. These strategies can help you use it effectively:
- Revocable or irrevocable trust. Use a trust to distribute assets, whether all at once or in stages. It can receive the policy payout and direct how those funds are used—for taxes, support, or future milestones.
- Coordinated will. A will names guardians, appoints executors, and covers any assets not placed in a trust. Without it, California probate law, not you, decides what happens to the remaining assets.
- Beneficiary review. Review beneficiary designations on life insurance, retirement accounts, and financial accounts to make sure they are consistent with your estate plan. If they’re outdated or incorrect, assets may go to unintended recipients or bypass your trust entirely.
- Irrevocable life insurance trust. Placing the policy in an ILIT keeps the payout from inflating your taxable estate and gives you more control over the timing and conditions, such as holding funds until a child reaches a certain age.
A well-designed estate plan includes legal and financial tools that work together to ensure that every asset is accounted for and your wishes are clearly followed.
Working with a qualified estate planning attorney can help you create a structure that continues your legacy and prepares your beneficiaries.
Why Work With an Estate Planning Attorney?
You can buy a survivorship policy online or through an agent. But without legal guidance, you might miss important details—like who should own the policy, or how the payout could impact your estate.
Working with an estate planning lawyer in Glendale, California
helps you:
- Make sure your policy fits your estate plan
- Avoid creating unintended tax consequences
- Coordinate your trust, will, and insurance
- Handle complex family structures with care
- Set up tools like ILITs or special needs trusts if needed
At Marinaccio Law, we work with families across the San Fernando Valley to create thorough, well-structured estate plans that support their long-term goals.
Our firm offers comprehensive services—from estate planning to real estate transfers—and guidance through the probate process. We take the time to understand what matters to you, so your plan reflects your preferences and protects the people you love when you’re no longer here.
Does Survivorship Life Insurance Fit Into Your Estate Plan?
Survivorship life insurance helps prepare your family for what comes after you’re gone. It provides financial stability for your heirs so they can carry out your wishes without added stress or loss.
If you’re married, have substantial assets, or want to simplify asset distribution among heirs, this policy can be a vital part of your estate plan. And if you’re in California, where home values alone can push estates above the federal tax limit, it’s worth a serious look.
Want to see if this strategy makes sense for your family? We can help you decide. Contact Marinaccio Law today to schedule a consultation with a skilled attorney. Our team will help you create an estate plan tailored to your life, goals, and peace of mind.
