Does Wife Need to Waive her Right to Community Property?

[VolAgent]

This appeared to be a highly specialized and detail oriented situation, but i did find it referred to on both attorney sites and some general insurance sites. I figured agents selling life insurance would be able to comment on it further. I don't know at what policy $ level an estate attorney or tax accountant should be involved to prevent actual tax consequences if the gift issue comes into play.

Words matter.

It is not gift tax, but Federal Estate tax. In some states it is inheritance tax, which while similar actually works differently.

So again, when is a life insurance death benefit ever taxable as a gift to a named beneficiary?

 

[LostDollar]

Words matter.

It is not gift tax, but Federal Estate tax. In some states it is inheritance tax, which while similar actually works differently.

So again, when is a life insurance death benefit ever taxable as a gift to a named beneficiary?

I did not make a mistake with my words. On this one I said, and meant, "gift".

Your question above changes one question to two questions. When are the proceeds of a life insurance policy a gift, and when are they a taxable gift?

The taxability question would be a highly situation specific issue determined by state and federal law and discussion of those laws by government and beneficiary representatives.

As far as the gift question, as I said it was based on internet reading. I would think that an experienced life insurance agent could find those answers far more quickly and in far more detail than I am able to do. I find it intriguing because it seems like a number of the FE polices I have seen discussed on site could be construed as gifts. (No practical effects of getting into that discussion-just an interesting technicality.)

 

[scagnt83]

I work in a community property state and the insurance carriers do not ask for spousal permission to have other beneficiaries besides the spouse.

Im licensed in multiple states, some being community property states. In some situations they do.

Its state specific and even carrier specific most likely. Some carriers have different viewpoints on the application of state laws.

 

[VolAgent]

I did not make a mistake with my words. On this one I said, and meant, "gift".

Your question above changes one question to two questions. When are the proceeds of a life insurance policy a gift, and when are they a taxable gift?

The taxability question would be a highly situation specific issue determined by state and federal law and discussion of those laws by government and beneficiary representatives.

As far as the gift question, as I said it was based on internet reading. I would think that an experienced life insurance agent could find those answers far more quickly and in far more detail than I am able to do. I find it intriguing because it seems like a number of the FE polices I have seen discussed on site could be construed as gifts. (No practical effects of getting into that discussion-just an interesting technicality.)

Give us an example of one you found, where the DEATH BENEFIT was taxable as gift versus estate or inheritance.

 

[LostDollar]

Give us an example of one you found, where the DEATH BENEFIT was taxable as gift versus estate or inheritance.

I made a comment to another poster, in response to a post which he made. As I touched on earlier, You have twisted my comment into an entirely different question, which I am not going to answer.

 

[DHK]

I made a comment to another poster, in response to a post which he made. As I touched on earlier, You have twisted my comment into an entirely different question, which I am not going to answer.

LostDollar,

You posed this question in your earlier post: "Your question above changes one question to two questions. When are the proceeds of a life insurance policy a gift, and when are they a taxable gift?"

When you said that VolAgent twisted your comment into something else... actually you did that originally with your own post.


This shows a lack of understanding on the mechanics of tax & estate planning. VolAgent asked a relevant question - although rhetorical because gift planning is only done while a person is alive, and death benefits are not subject to gifting rules. Estate taxes - possibly - depending on ownership structure outside of an ILIT, but not gifting rules.


This is an example where a well-intentioned poster is giving ideas/advice can be damaging and confusing to others.

 

[VolAgent]

I made a comment to another poster, in response to a post which he made. As I touched on earlier, You have twisted my comment into an entirely different question, which I am not going to answer.

No, sadly you took something out of context and got called out on it.

AdjusterJack was completely correct, a death benefit is not a gift. It may be part of the decedent's estate for tax purposes.

Now, there are many times when transferring ownership of a policy can be construed as a gift under tax law. In fact, most transfers would constitute a gift. Which is why it is best to avoid if at all possible.

Another classic is the Goodman Triangle.

Again, why it is better to work with an agent versus a 1-800 number or a website where you never speak with someone.

 

[LostDollar]

No, sadly you took something out of context and got called out on it.

AdjusterJack was completely correct, a death benefit is not a gift. It may be part of the decedent's estate for tax purposes.

Now, there are many times when transferring ownership of a policy can be construed as a gift under tax law. In fact, most transfers would constitute a gift. Which is why it is best to avoid if at all possible.

Another classic is the Goodman Triangle. The things I saw about the Goodman Triangle did not mark it as a transfer of ownership situation, but as a 3 way situation created at the time the policy is originally purchased.

Again, why it is better to work with an agent versus a 1-800 number or a website where you never speak with someone.

https://www.daytonestateplanninglaw...tax-issues-associated-with-life-insurance.pdf


There is one link which indicate a Goodman triangle situation leads to a gift. (cant make the other work right now.)

Gifts, like inheritances and estates, may or may not be subject to taxes. That is why one consults an estate attorney or tax accountant, to determine if their situation can be constructed or construed to avoid taxes.

 

[VolAgent]

https://www.daytonestateplanninglaw...tax-issues-associated-with-life-insurance.pdf


There is one link which indicate a Goodman triangle situation leads to a gift. (cant make the other work right now.)

Gifts, like inheritances and estates, may or may not be subject to taxes. That is why one consults an estate attorney or tax accountant, to determine if their situation can be constructed or construed to avoid taxes.

Fair enough, I stand corrected.

I had recalled it being income tax on a Goodman Triangle, not gift. But I also knew it was a situation best avoided, and an easy one to avoid.

 

[LostDollar]

Fair enough, I stand corrected.

I had recalled it being income tax on a Goodman Triangle, not gift. But I also knew it was a situation best avoided, and an easy one to avoid.

Thanks. I appreciate the insurance terminology and hope I can remember it. The search phrases I was working with were very clumsy combinations of words.

I owe you an apology too, because I was, in part, being stubborn because of a comment in another thread.

Sorry, and thanks for the support and help you have extended over the months.

Regards.
LD