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Posted by My interest on January 3, 2007, 10:49 pm
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Does life insurance have any inheritance tax associated with
it? ... especiallly if the beneficiary is not a US citizen
or even not a US resident?
(Unlike many other countries, US taxes inheritance tax for
property transfer between husband and wife if the receiving
spouse is not a US citizen. So I wonder is there any
implications on the life insurance proceeds.)
Thanks.
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Posted by Stuart A. Bronstein on January 4, 2007, 8:35 pm
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> Does life insurance have any inheritance tax associated with
> it? ... especiallly if the beneficiary is not a US citizen
> or even not a US resident?
If you are considered the owner of life insurance when you
die, the death benefit is included in your estate for estate
tax purposes. If you are talking about a non-citizen
spouse, you can have the spouse be the owner of the policy,
and she will then receive the death benefit free of both
income and estate tax.
Frequently this kind of thing is done using a life insurance
trust, though it is not necessary.
Stu
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<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
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<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
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<< Copyright (2006) - All rights reserved. >>
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Posted by Benjamin Yazersky CPA on January 4, 2007, 8:54 pm
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> Does life insurance have any inheritance tax associated with
> it? ... especiallly if the beneficiary is not a US citizen
> or even not a US resident?
>
> (Unlike many other countries, US taxes inheritance tax for
> property transfer between husband and wife if the receiving
> spouse is not a US citizen. So I wonder is there any
> implications on the life insurance proceeds.)
There is a Federal estate tax, which can include the life
insurance if the decedent had an interest in the policy. If
the decedent had the right to change the beneficiary, it
will usually be included in the taxable estate. It is not an
inheritance tax. Some states (like NJ for example) do have
an inheritance tax.
___________________________________
<<< Benjamin Yazersky, CPA [NJ & NY] >>>
-----> real address on hobokeni or hobokenx <-----
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
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<< Copyright (2006) - All rights reserved. >>
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Posted by kastnna on January 4, 2007, 8:54 pm
Please log in for more thread options Someone please correct my mistakes, but I believe ordinarily
life insurance death benefits are not subject to taxation.
However, they are included in one's total estate for
determining any non-exemptable remainder that is subject to
estate tax.
Ordinarily the unlimited marital deduction would allow you
to transfer your estate to your spouse upon your death
without paying federal estate taxes, but is only available
to US citizens. If your estate is large enough that you will
be subject to estate tax, consider an irrevocable life
insurance trust or other vehicle to remove the asset from
your estate. I suggest you consult a lawyer, estate planner,
and/or CPA to confirm how a non US citizen will affect the
taxes.
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
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Posted by Shyster1040 on January 4, 2007, 9:13 pm
Please log in for more thread options If the decedent insured held any of the incidents of
ownership in the life insurance policy, then the proceeds
payable on the decedent's death are included in the
decedent's estate for federal estate tax purposes.
Thus, if the person who is the insured under the policy
(i.e., the person whose death will trigger payment of the
death benefit) has no ownership interest in, or control
over, the policy, the death benefit is not included in the
insured's estate upon death.
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
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