Life insurance can cover expenses, replace lost income, fund a legacy and guard against loss of a legacy. It provides for our families and communities in a way that lasts long after we’re gone.

Life insurance also offers three potential legacy planning advantages over other assets:

- The death benefit is typically passed along free of income and estate taxes.

- The insured person can control how much is left behind through a specific death benefit.

- Life insurance provides leverage that may generate a benefit greater than what was paid into the policy.

Consider a small-business owner with two adult children, one who is an active part of the family business and one who wants nothing to do with it. The business could be left to the child who has been active in it and the other child could be provided with an equivalent value in life insurance. This strategy also works for family farms, vacation homes or other properties that some heirs want to keep and others don’t.

The American Taxpayer Relief Act of 2012 set the individual federal estate tax exemption at $5 million. Adjusted for inflation, the individual exemption is $5.45 million in 2016 and twice that for married couples. Although tax law change has a number of people thinking they don’t need insurance to create a legacy, estate taxes are not the only part, nor the most important part, of legacy planning. Legacy planning is about how you want your family and your community to remember you.

Wells Fargo Advisors is not a legal or tax adviser. Individuals should consult with their attorney, accountant and/or estate planner before taking any action.

Insurance products are offered through nonbank insurance agency affiliates of Wells Fargo & Company and are underwritten by unaffiliated insurance companies.

Investments in securities and insurance products are: not FDIC-insured/not bank-guartanteed/may lose value.

Investment products and services are offered through Wells Fargo Advisors Financial Network LLC (WFAFN), Member SIPC. Bennett Associates Wealth Management is a separate entity from WFAFN.

This item was submitted by Wendy L. Bennett, senior financial adviser, Bennett Associates Wealth Management.