Is Life Insurance Exempt From Estate Tax?

  1. 63333 POINTS
    Peggy Mace
    Most of the U.S.
    No, Life Insurance is not exempt from state or federal estate tax unless it is of an amount that is exempted by law. That amount varies by state for state estate taxes, and a few states do not have state estate tax (or inheritance tax) at all. The limit in 2013 for federal estate tax is $5,250,000. If the estate is larger than that with life insurance proceeds included, federal estate tax will be owed on the amount that is not exempt.

    Life insurance that is properly set up in an irrevocable life insurance trust is not subject to estate tax.
    Answered on September 3, 2013
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