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    lpenek's Avatar
    lpenek Posts: 28, Reputation: 1
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    #1

    Sep 27, 2012, 09:27 AM
    Irrevocable Life Insurance Trust death benefits tax free?
    About 10 years ago I purchased an irrevocable life insurance trust from USAA. Yearly the trustee (not me) gets an accounting which shows the "base policy" amount and the "paid-up additional Insurance" which increases each year. My original paper work indicates that the death benefit is "generally" income tax free. Can you provide any info on whether this will or will not be taxable to my heirs?
    JudyKayTee's Avatar
    JudyKayTee Posts: 46,503, Reputation: 4600
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    #2

    Sep 27, 2012, 09:41 AM
    Quote Originally Posted by lpenek View Post
    About 10 years ago I purchased an irrevocable life insurance trust from USAA. Yearly the trustee (not me) gets an accounting which shows the "base policy" amount and the "paid-up additional Insurance" which increases each year. My original paper work indicates that the death benefit is "generally" income tax free. can you provide any info on whether this will or will not be taxable to my heirs?

    Life insurance has a direct beneficiary and is not taxable to the beneficiary/beneficiaires.

    It IS taxable if it's payable to the estate.
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