“Ezrat Achimis currently actively assisting and supporting 500 families and has helped hundreds more since the start of the war"
I am writing in regards to an article in last week’s issue of Mishpacha about the pros and cons of permanent life insurance. While I found the article well written and informative, it contained a serious error in regards to the taxation of life insurance proceeds.
The article made the claim that life insurance avoids estate taxes. This is not the case. While life insurance avoids income taxes, if the decedent had any incidence of ownership in the policy or if the policy was payable to the decedent’s estate, the life insurance proceeds are included in the decedent’s estate and are subject to estate taxes.
Life insurance proceeds are not included in the decedent’s estate when not owned by the decedent, such as when owned by an irrevocable trust. However, any other assets owned by an irrevocable trust would not be subject to estate taxes either.
Life insurance plays an important role in estate planning, but it does not avoid estate taxes.
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