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Life & Health Insurance/estate tax on life insurance?


Is my son liable for estate tax on my life insurance which will have no accumulated cash value upon my demise?

First off, it is your estate, not the recipients of your assets, that is responsible for the estate tax.  

Right now the exempt amount is around $5 million of assets so if you're under that you should be ok.

That said, on life insurance it depends on who the owner is (not the beneficiary -- the policy owner).

The owner is the one, for example, that has the right to change beneficiaries or anything else to do with the policy.  You can change ownership with a simple form the insurance company can give you.

If you die owning the policy, then the death benefit is calculated into the estate-taxable value of your estate regardless of who actually gets it; but if someone else owns it, like your son the beneficiary, then it is not part of the estate tax asset calculations.  I hope that helps.  

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Lee Horner


Questions invited on "hard to insure" life cases; also universal life with living benefits, term with "money back" premium refund feature, and using universal life for retirement planning.


Estate Planning Attorney since 1985; practicing in California and Arizona, and independent life insurance agent since 1975 specializing in "interesting" or "hard to insure" life insurance cases and also tax free retirement planning.

AHEPA, Freedom Equity Group and the Farm Bureau.

BBA in Business Management from Univ of New Mexico; Juris Doctorate in Law, Lincoln Law School of Sacramento, CA.

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