Transfer Tax Implications of Life Insurance and GSTT

Transfer Tax Implications of Life Insurance and GSTT

To help look after future generations, many people elect to transfer property and life insurance policies by gift or at death to a person two more generations below himself or herself. Typically, this means grandchildren and great-grandchildren, also referred to as skip-persons. The goal is to have assets pass from grandparent to skip-persons without being taxed in the child’s estate.

Typically, the transferor places assets in trust to children for life, then to grandchildren. Or, the transferor gives property to grandchildren or places it in trust for their benefit.

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How can I keep my life insurance policy proceeds private?

How can I keep my life insurance policy proceeds private?

If you’re a person who values confidentiality, life insurance can be a good way to pass along funds away from outside scrutiny or even other beneficiaries.

Life insurance can be easily modified so it isn’t considered a part of a policyholder’s estate, according to Edward E. Graves, author of “McGill’s Life Insurance.” This makes it immune from public disclosure. In other words, any information about the policy owner, their beneficiaries, or the amount of death benefit in the policy cannot be made public.

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