You have to be very aware of the potential ravages of the estate tax when you are looking forward toward the future. Everyone in the country has the federal estate tax to be concerned about, but you must also take into consideration anything that could happen on the state level.
In addition to this, we have a state inheritance tax as well, so we are more exposed than citizens of most of the other states.
One question that people often have when they are evaluating their position involves life insurance. Are your life insurance policy proceeds considered to be part of your estate for estate tax purposes?
The answer is yes if you own the policies yourself and if you were to make your spouse the beneficiary, he or she would own those resources and they would be a taxable part of his or her estate.
An alternative would be to create an irrevocable life insurance trust and have the trust purchase the policies. If you go this route the beneficiary can receive distributions from the trust but these assets were not your personal property so the estate tax is not applicable.
Assuming your spouse was the beneficiary you could include a successor who would benefit from the trust after the passing of your spouse. Your spouse didn’t own the resources personally so once again the estate tax is not imposed.
If you would like to have all of your questions answered about this and other tax efficiency vehicles, the information you are seeking is just a phone call away. Take action right now to set up an informative consultation with a licensed and experienced estate planning lawyer. Your attorney will give you personalized attention and you will ultimately walk away with an estate plan that is tailor-made to suit your needs.
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