Life Insurance Tax Consideration


R

Ray

I recently took out a life insurance (waiting to sign) in
$1mil, but want to consider the tax consequences before
signing. I am listed as the owner and the insured on the
policy. I have my wife and my son from a previous marriage
as the beneficiaries on the policy. The premiums for the
policy will be paid from the community assets. If I am both
the policy holder and the insured, will my beneficiaries be
subject to income or estate tax on the proceedings. One of
the reasons I chose to be the owner of the policy is that I
want to be able to control who the beneficiaries would be
(obvious reasons), but at the same time want to make sure
that my spouse and my son won't be subject to unnecessary
taxes.


Any hints/ideas will be greatly appreciated.
 
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C

Cal Lester

Not to worry.............

A Named beneficiary (or beneficiaries) receive the PROCEEDS (Death Benefit)
of ANY personal Life Insurance Policy Federal Income Tax Free.

However, IF the Federal Estate Tax is re-instated in 2010, then Ownership of the
polcy would cause it to includeable in your ESTATE, which may or may not cause
an Estate Tax to be payable. At this point, that should not be a problem............
In the event that the F/E/T/ is re-instated, you will have time to make other arrangements

Cal Lester CLU
 
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