Life Insurance in the Estate Plan
Matching product to purpose, keeping proceeds out of the estate, ownership and beneficiary structures, and the traps that make a death benefit taxable.
What this guide covers
- Select the product from the purpose: term for dependency-period replacement, survivorship permanent coverage for estate liquidity, single-life where tax is due at the first death.
- Proceeds are income-tax-free under IRC 101(a) but includible in the estate under IRC 2042 if the insured holds any incident of ownership or the proceeds are receivable by the executor.
- Have the trust apply for a new policy to avoid the IRC 2035 three-year lookback, and analyze transfer-for-value under IRC 101(a)(2) before any policy changes hands.
- Never name a minor or, ordinarily, the estate as beneficiary; name the trust by its exact name and date and confirm contingent designations.
- Administer an insurance trust properly: Crummey notices, lapse management, affirmative GST allocation, and no direct premium payments by the grantor.
- Employer-owned policies require pre-issuance notice and consent under IRC 101(j), and split-dollar arrangements require documented annual compliance.
The full guide includes the detailed analysis, worked examples, statutory citations, and related resources below.
Sign in to read the full guide
The Estateur Resource Library — 31 attorney-grade guides — is included with an Estateur subscription. Sign in to your account to open the full guide, or start a subscription to unlock the whole library.
Educational reference, not legal advice. Prepared for licensed professionals as general reference; not legal advice and no attorney-client relationship is created. Law varies by state and changes over time — verify transfer-tax figures and statutory citations against current primary authority. This resource was last updated 2026-09-18. Estateur is not a law firm.