Legal Question in Insurance Law in California

life insurance policy

My husband and I want to buy life insurance policies. I was told that in the event of one of us dying, the other would have to pay tax on the life insurance money if we purchase the policy ourselves and that someone else should buy the policy to avoid paying tax. Is this true? How should life insurance be purchased to avoid being taxed when the policy is paid to the beneficiary.


Asked on 7/28/08, 3:29 am

1 Answer from Attorneys
Steven Murray Steven W. Murray, APC

Re: life insurance policy

Generally, threre is a Federal Estate (death) tax on all property a person owns. But the exemption is $2M this year, and it gets bigger. The law may or may not be extended in a few years. If you own a policy on your husband's life (not community property) and he dies, the policy is not from something he owned and is not taxed.

If you have substantial assets, you should see a qualified estate planning attorney as these matters are quite technical and detailed. And these questions should be asked in the context of an estate plan, not singly and isolated from your family situtation.

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Answered on 9/02/08, 3:46 pm


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