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The Jacobs Company
Keeping Life Insurance Out of Your Taxable Estate

Using Ownership and Beneficiary Designations to Keep Life Insurance Out of the Estate

If certain rules are adhered to, it is possible to name a child as owner and beneficiary of a new life insurance policy in a way that will keep the insurance proceeds out of your taxable estate. Generally, premiums must be gifted to the children and the children must pay the premiums. It is extremely important the insured person avoids all incidence of ownership when using this strategy.

Extreme care must be taken if the child is still a minor, or if more than one owner and beneficiary will be named on the same policy. In these types of situations, competent insurance advice is critical. Other advisers on your estate planning team, including your CPA (for gift tax ramifications) and attorney, should also be consulted.

Overview

Irrevocable Life Insurance Trusts (ILITS)

How to Get Existing Policies Out of My Estate

Can the Three-Year Rule be Avoided?

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