Life Insurance Trust to Reduce Estate Taxes
One common mistake in estate planning is not making plans to shelter taxable life insurance proceeds from estate taxes. Life insurance proceeds can push your total estate value beyond the nontaxable amount causing the difference to be taxed at a +/- 50% rate. This can be avoided by having the policy owned by your wife, children, or better yet, a life insurance trust. You can provide the money to pay the premiums through annual gifts. When you die, the proceeds will not be part of your estate.