Anyone know if the tax applies to life insurance benefits?
Life insurance policies are “owned” by someone. If you are the “insured” and the “owner” of the policy, the insurance proceeds will be included in the taxable assets of the estate that are subject to the estate tax, after the deduction of the current estate tax exemption amount.
To confirm the ownership of a policy, contact the life insurance company that issued the policy and ask them to confirm the ownership of the policy. Concurrent with that, check who the “beneficary” is - if the policy is several years old, the original beneficiary may not be whom you want to receive the proceeds at this time. If you are the “owner” of the policy, you can change the “beneficiary”.
If you own the policy and want it out of the taxable estate, you will have to make a gift of the policy to another “owner”, who will then have it included in their estate. If the cash value of the policy exceeds $13,000, you will then have to contend with the “gift” tax.
Good luck...
the insurance proceeds will be included in the taxable assets of the estate that are subject to the estate tax
Well, I have to say that "SUCKS!"...
Will check it out as you suggest, but I may just have to drop the policy if indeed half of what I'm paying in monthly ( significant ) life insurance fees insures the dang government gets half of my survivor benefits.
There have to be better alternatives...