When Is A Trustee Not A Trustee? When The Trust Owns Insurance

Journal of Passthrough Entities

Insurance is often touted to be one of those rare assets free of estate tax. Not exactly. It is not free of estate tax to any greater extent than cash or marketable securities. But insurance transferred to a third party, much like cash and marketable securities transferred to a third party, is free of estate tax. And insurance, because it has no value (in the case of a term policy) or minimal value (in the case of a whole life policy) at inception of a policy, is a seemingly easier asset to gift than cash or marketable securities because the transfer of insurance has minimal gift tax concerns.

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