Are death benefits from insurance policies considered part of an estate?

Question

Are death benefits from insurance policies considered part of an estate?

Answer

If the estate was not the beneficiary then no.

John

Answer

This is actually a very complicated question. First, there's a difference between a taxable estate and the probate estate. Life insurance is not part of the probate estate unless the estate is the beneficiary of the policy.

With respect to whether the policy is subject to tax:

1) It is usually not subject to income tax (there are some exceptions);

2) It is usually not subject to the PA inheritance tax;

3) It is subject to the federal estate tax if the decedent was the insured or the decedent transferred it within three years of death. Otherwise, it is usually not subject to the federal estate tax.

Hope this helps, but you may want to ask a more focused question with some facts about who owns the policy, who it is payable to and what your concerns are.

Kevin A. Pollock, J.D., LL.M.

www.PollockAtLaw.com

P: (609) 818-1555

Licensed to practice law in Florida, New Jersey, New York and Pennsylvania.

Also, visit my blog at: http://WillsTrustsEstates.blogspot.com/