Wills, Trusts & Estates Prof Blog

Editor: Gerry W. Beyer
Texas Tech Univ. School of Law

Saturday, August 9, 2014

Life Insurance Taxes

Life Insurance

Taxpayers are recurrently surprised by the fact that the ownership or receipt of a life insurance policy can result in taxable income.  This was the case in Gluckman v. Commissioner, No. 13-761 (2d Cir. Nov. 22, 2013), where taxpayers maintained that the distribution of the life insurance policies to them on their employer’s withdrawal from a non-qualified plan should not be subject to tax. 

The Court rejected the Gluckman’s argument that the policies were subject to a sizeable risk of forfeiture.  Just because the Gluckmans chose to transfer the policies into a new non-qualified plan does not repudiate the fact that the Gluckmans had control of the disposition of the policies during the tax years, and therefore, were subject to income tax on the value of such assets. 

See Kathy Sherby and Stephanie Moll, Valuation of Life Insurance is Not Always the Issue, Mondaq, July 7, 2014.


Estate Planning - Generally, Income Tax, New Cases, Non-Probate Assets | Permalink

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