Life insurance planning: Avoiding the 3-year rule
Abstract: Life insurance is a fundamental component of most estate plans. And with proper planning, the insurance proceeds can also be exempt from estate taxes. The key to keeping life insurance out of a person’s taxable estate is to make sure he or she doesn’t own the policy or possess any “incidents of ownership” in it, such as the right to change beneficiaries or borrow against its cash surrender value. This article details how to keep insurance proceeds out of an estate.