Did you know that the beneficiaries of anyone who buys their own life insurance, or has life insurance through their job, will typically have to pay federal estate tax on the proceeds of the insurance policy? However, with an Irrevocable Life Insurance Trust, the proceeds of a life insurance will not be taxed as part of the decedent's estate.
With an Irrevocable Life Insurance Trust, the insurance policy is not owned by the decedent or the decedent's spouse. The insurance policy is owned and paid for by the Trust, therefore, the proceeds of the life insurance will not be considered part of the decedent's estate.
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