Life Insurance for Estate Taxes

If you think you may have an estate tax liability in the future, consider purchasing a "second-to-die" life insurance policy which pays out when the second spouse dies. The proceeds of this policy can be used to replace the inheritance lost due to estate taxes.

IMPORTANT: This policy should not be personally owned (or it will go into the taxable estate). The policy should be in the name of an heir or trust, which must also pay the policy premiums. However, you can gift cash to cover the premiums each year. Consider contacting your financial advisor to assist you in purchasing the most appropriate insurance policy to help you preserve your estate.