Policy Owner question

[wfs]

If I am the policyowner on a policy covering my own life, and I die and leave the proceeds to my wife or child, is there an estate tax consequence? Would my wife being the owner of my policy (and vice versa) be a better strategy?

Thanks

 

[Norwayguy]

If I am the policyowner on a policy covering my own life, and I die and leave the proceeds to my wife or child, is there an estate tax consequence? Would my wife being the owner of my policy (and vice versa) be a better strategy?

Thanks

Not enough information. Yes if you are the owner of the policy it does get added in for estate tax purposes, however we do not know the amount of the policy or the rest of the size of your estate...Another option would be ILIT if you truely have estate tax issues...however I would recommend seeking the advice of a competent local professional.

 

[wfs]

But if it is the husband-to-wife, doesn't this always pass estate tax free regardless of the amount? (Spousal exclusion)

Is there any benefit from a husband and wife owning each other's policy?

 

[David C]

I've had to deal with this two times recently.

A man supported through college by his wife, divorces her three years after getting a good job, he's the owner of the policy, and is in the process of changing beneficiaries, she, however, would have liked the option of continuing as the beneficiary and perhaps, at some point converting the policy to permanent coverage. She had no options since she wasn't the owner.

Couple married appx. 20 years, for many years they've had a large permanent policy, he's the owner, recently decides to start stripping out cash, files for divorce, but allows her to become the owner of this policy.

I guess if a spouse thinks the other may cheat, then they should request being the owner, but do you want to suggest that at closing (or any other time.)

 

[LGilmore]

"But if it is the husband-to-wife, doesn't this always pass estate tax free regardless of the amount? (Spousal exclusion)"

No.

 

[moonlightandmargaritas]

"But if it is the husband-to-wife, doesn't this always pass estate tax free regardless of the amount? (Spousal exclusion)"

No.

Did someone do away with the unlimited marital deduction when I wasn't looking?

Please clarify.

 

[wfs]

From my licensing materials:

While policy proceeds are not taxable as income to the beneficiary, they are included in
the insured’s gross estate and are subject to estate tax if:
• the insured owns the policy at death, or
• the proceeds are payable to his estate, or
• he assigned the policy to someone else within the three years before he died.

However, the portion of the estate passing to a surviving spouse is subject to a marital
deduction, meaning it is not subject to estate tax

​

 

[LGilmore]

But fellas, what happens when one spouse or both are not US citizens?

No unlimited martial deduction, all assets here and abroad can be subject to estate taxes at both fed and state levels. The unlimited maritial deduction is only available to us citizens.