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Ed, 12k in 2007 and 2008, but there are "other ways" of doing it (and perfectly legal)
A Funeral Insurance Trust is an irrevocable trust, but it is specifically for use in paying burial expenses and attendent expenses related to a funeral. In some states, the amount that can be placed in such a trust is limited by law. Usually the maximum amount of such a trust would be $12,500 and it is funded by a single pay whole life policy. This protects the money from being included in an estate for purposes of Medicaid eligibility. An irrevocable life insurance trust, on the other hand, does not have a limit. Its purpose is to keep the value of the life insurance from being included in the estate for Federal Estate Tax purposes, as Paul pointed out. Hakim, I believe you have confused the two trusts. In any case, the death benefit proceeds are deemed tax-free to the beneficiaries.
since there is no federal estate tax for a spouse
I guess the most common would be to have an adult child own the policy, and gift the premium to them to pay?
Of course, now the proceeds are in THEIR taxable estate...
Many adult children will choose to spend the $12,000 rather than applying it to the insurance.
I don't think this is what you meant. Oh yes, there is federal estate tax for a spouse. However there is an unlimited marital deduction between spouses.
Is that what you meant?