Life Insurance and Estate Planning
|Title and Description|
| Are life insurance proceeds income taxable? |
In general, life insurance proceeds paid to you because of the death of the insured are not subject to federal income tax.
| The death benefit from insurance on my life will be paid to an irrevocable life insurance trust (ILIT). What if those funds are needed to pay my estate taxes? |
These proceeds may escape estate taxation as long as the trust owns the policy and you haven't retained any incidents of ownership.
| What is a life insurance trust and why should I consider establishing one? |
A trust that has the power to purchase life insurance policies on the grantor, the grantor's spouse, or the trust beneficiaries.
| When I die, is my beneficiary required to take a lump-sum payment of my life insurance death benefit? |
It isn't necessary for your beneficiary to take a lump sum, although many people prefer that option.