Life insurance is subject to estate tax when it brings the value of the estate (all assets, including the life insurance death benefit) over the exempted amount. Only the value of the estate that exceeds the exemption is subject to estate tax. The federal exemption for 2014 is $5,340,000. However, some states collect state estate or inheritance tax with smaller exemptions.
Life insurance proceeds are not included in the value of the estate when the life insurance policy is owned by a properly set up Irrevocable Life Insurance Trust. The ILIT must hold the trust at least three years before death of the insured.
In Canada, if life insurance is paid to a named beneficiary, then the death benefit is not considered part of your estate and bypasses probate. Probate fees vary buy province.
In Nova Scotia probate fees for example are:
First $10,000 - $83
$10,000 to $25,000- $209
$25,001 to $50,000 - $438
$50,000 to $100,000 - $973
Over $100,000 - $973 + 1.645% of amount in excess of $100,000
If you have further questions, or feel that I could be of assistance, please do not hesitate to contact me.
If you would like to work with a local life insurance broker, you could start with a Google search. For example, if you search for life insurance broker Halifax or life insurance agent Halifax, my name, along with several others, will come up. You can use the same method to find a life insurance broker in your community.
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Life insurance proceeds are not included in the value of the estate when the life insurance policy is owned by a properly set up Irrevocable Life Insurance Trust. The ILIT must hold the trust at least three years before death of the insured.
In Nova Scotia probate fees for example are:
First $10,000 - $83
$10,000 to $25,000- $209
$25,001 to $50,000 - $438
$50,000 to $100,000 - $973
Over $100,000 - $973 + 1.645% of amount in excess of $100,000
If you have further questions, or feel that I could be of assistance, please do not hesitate to contact me.
If you would like to work with a local life insurance broker, you could start with a Google search. For example, if you search for life insurance broker Halifax or life insurance agent Halifax, my name, along with several others, will come up. You can use the same method to find a life insurance broker in your community.