How Taxation of Life Insurance Affects Estate and Wealth Planning (Currently Unavailable)

Author: Steven G. Siegel

Life insurance is an asset that many of our clients own – but, unfortunately, few understand all of the important tax consequences involved with their policies. As trusted advisors, tax professionals and planners need to make sure clients understand and use this asset effectively as part of their wealth management and estate plans. The Program will explore the income, gift, and estate tax rules for life insurance you should know and address key tax planning issues, including irrevocable life insurance trusts, the use of life insurance in buyout agreements, corporate-owned life insurance, gifts of life insurance policies to charity, tax-free policy exchanges, life settlements, and more.

Publication Date: August 2019

Topics Covered

• Life Insurance and the Income Tax
• Gifts of Life Insurance and the Gift Tax
• Life Insurance Trusts
• The Annual Exclusion and Crummy Powers
• Transfers of Life Insurance to Charity

Learning Objectives

• Identify a basic understanding of life insurance and related federal taxation considerations
• Recognize how to plan for using life insurance as an asset in wealth management and estate planning
• Identify how to use estate plans that take advantage of life insurance tax treatment
• Recognize when the income exclusion is limited
• Identify the death benefit that can be excluded from taxation by the new employee
• Describe Code Sec. 1035 permits a tax-free exchange
• Describe Crummey Power
• Recognize how transferred ownership of the policy to a charity, with premiums paid by a donor are recognized
• Differentiate when the classification of two alternative regimes for the tax consequences of an equity split”dollar life insurance arrangement depends on
• Describe the principal reasons for the use of a revocable life insurance trust
• Recognize correct statements in relation to a gift of an insurance policy made by the insured within three years of death
• Identify when an estate begins and ends for tax purposes
• Recognize which treatment is considered appropriate, if a cash value life insurance contract is surrendered by an insured
• Describe dividends paid on life insurance policies
• Recognize the requirements to form a trust
• Describe "incident of ownership"
• Recognize incorrect statements in relation to insurable interest

Level
Basic

Instructional Method
Self-Study

NASBA Field of Study
Taxes (2 hours)

Program Prerequisites
None

Advance Preparation
None