Taxation of Life Insurance Proceeds
Date: Thursday, August 6, 2026
Instructor: Klaralee R. Charlton
| Begin Time: |
11:00am Pacific Time
12:00pm Mountain Time
1:00pm Central Time
2:00pm Eastern Time |
| CPE Credit: |
2 hours for CPAs
2 hours Federal Tax Related for EAs and OTRPs
2 hours Federal Tax Law for CTEC
2 hours General Principles of Financial Planning for CFP |
|
NOTE: Go to My Professional Profile in your CCH CPELink account settings to ensure your name, and PTIN number; matches your PTIN card
Life insurance proceeds are often assumed to be tax‑free, yet estate and income tax rules can significantly alter that outcome when policies are structured or transferred incorrectly. This practical course provides tax and financial professionals with a clear understanding of when life insurance proceeds are excluded from income and estate tax—and when they are not.
Participants will analyze the income and estate taxation of life insurance proceeds, review common transactions that inadvertently trigger taxation, and examine planning strategies to preserve tax‑favored treatment.
The course explores policy ownership structures, transfers of policies among related and unrelated parties, the transfer‑for‑value rules and their exceptions, and the strategic use of irrevocable life insurance trusts (ILITs). Real‑world examples highlight how careful planning can help minimize income and estate tax exposure while avoiding costly mistakes that impair client outcomes.
Who Should Attend
This course is designed for professionals who advise clients on estate planning, insurance planning, and wealth transfer strategies.
Topics Covered
- Income tax treatment of traditional life insurance proceeds
- Estate tax inclusion and ownership considerations
- Irrevocable life insurance trusts (ILITs) and Crummey withdrawal powers
- Transfer‑for‑value rules and tax consequences
- Statutory exceptions to transfer‑for‑value taxation
- Transfers involving grantor trusts and the insured
- Planning techniques to minimize income and estate taxation
Learning Objectives
- Differentiate the income tax and estate tax treatment of life insurance proceeds
- Identify transactions that cause life insurance proceeds to become taxable
- Analyze the tax consequences of transferring life insurance policies to related and unrelated parties
- Apply transfer‑for‑value rules and statutory exceptions to common planning scenarios
- Evaluate ownership and transfer strategies designed to preserve the tax‑exempt nature of life insurance proceeds
Level
Basic
Instructional Method
Group: Internet-based
NASBA Field of Study
Taxes (2 hours)
Program Prerequisites
None
Advance Preparation
None
