How to Get Existing Policies Out of my Estate

Existing life insurance policies can be transferred out of your taxable estate. This is generally accomplished in one of two ways. One way is to name an Irrevocable Life Insurance Trust as the owner and beneficiary of the policy. Another way is to name a child or grandchild as owner and beneficiary. In either instance, the insured must live for three years after the transfer, or the insurance proceeds will be considered part of the taxable estate. It is important to note that any transfer to a third party will constitute a gift equal to the current policy surrender value. A CPA should be consulted to make sure that any required gift tax returns are filed to document this gift.

This document was last modified on July 27, 1999 by LMLeber

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