For years, savvy estate attorneys have been recommending that their wealthy clients use their life insurance policies to avoid paying estate taxes.
This practice is not as favorable as it once was, as the IRS has taken this very seriously and changed their policies regarding these types of tax shelters.
Even though a life insurance policy is not taxed as income, it is still subject to estate taxes.
It’s important that you follow the advice of an experienced estate attorney and create your plans and policy according to current law.
It is recommended that your beneficiary be the person who owns and purchases your insurance policy.
Under no circumstance, should you go out and purchase the most expensive life insurance policy that you can find because the IRS has changed their policies and you will be taxed accordingly.
To be sure everything is being done according to current IRS standards, consult with an estate attorney.