Question: After I die, will the proceeds from my life insurance policy be taxable as income to my family.
Answer: Proceeds from life insurance are not taxable as income. Neither are other inheritance funds, such as bank accounts, real estate or other investments. All of these items are included in your gross estate for estate tax calculation purposes, though.
In Massachusetts, estate tax doesn’t apply unless your estate exceeds One Million dollars. Cross this threshold by a dollar, and your entire estate is subject to estate tax.
You may not be a millionaire during your life. Add life insurance proceeds into the mix, and you may be worth a lot more dead, than alive.
Estate taxes can be avoided by a married couple using special trusts, or by a single person using a program of gifting. It is worth an hour of your time to meet with an estate planner to discuss this possibility. You may save your family thousands of dollars.
Attorney James Haroutunian practices estate planning and real estate law in Billerica at 790 Boston Road. Contact him to begin an estate plan or with questions at www.hlawoffice.com, 978-671-0711 or email him at email@example.com.