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Show Utah Farm Bureau News May 1972 YOUR ESTATE By John S. Young Director of Agencies Country Mutual Life Editors Note: Information in this column is in as legal advice or as specific recommendations. Any no yay intended legal question involving your estate should be directed to an attorney of your choice. TAXED OR NOT TAXED THATS THE QUESTION QUESTION : I took out a sizable insurance policy about four years ago, and at that time the insurance agent told me that if I died my wife would receive the money and not have to pay tax on it. We are now having our wills drawn, and my lawyer tells me that the full amount will be taxed in my estate. Who is right? Im confused. ANSWER: They are both right. The reason that you are confused is that they are talking about two different taxes. Your agent was talking about income tax, and he is correct - your widow can normally receive the proceeds of your Page to $1,000 of interest earned by the proceeds in each taxable year. PROCEEDS of life insurance are includable in the insureds estate when the proceeds are payable to the insureds estate, or when the insured has an incidence of ownership in the policy at the time of his death, or when the policy on his life has been transferred within 3 years before his death and in contemplation of death. IN YOUR CASE, the beneficiary is your wife and therefore not payable to your estate. However, I would assume you do own the policy and therefore it will be includable in your gross estate. YOU MIGHT want to consider and discuss with your lawyer the advisability of transferring the ownership of the policy to your wife without any consideration and make an annual gift to her sufficient to pay the premiums. THIS COULD be a way of Keith Stratford (L) congratulates Dr. Doyle Matthews, Mrs. Matthews watches, after banquet address in Weber County. con-plete- ly preventing the proceeds from being included in your estate and at the same time provide your widow with cash with which to pay estate settlement costs when needed up your death. If you dont whine an complain long enough, your parents will think they won! No other store offers more in insurance policy, payable by reason of the insureds death, income tax free. YOUR ATTORNEY, on the other hand, is probably referring to the federal estate tax. If you are the owner of a policy on your life, the full proceeds will normally be included in your gross estate and subject to the federal estate tax along with your other assets. AS A GENERAL rule, death proceeds are received tax free by the beneficiary regardless of whether the beneficiary is an individual, a corporation, a partnership, a trustee, or the insureds estate regardless of who owns the policy or who pays the premium. This exclusion extends even to the accidental death benefit included with a life insurance, or provided by a health insurance contract. However, the proceeds must be proceeds of life insurance and must be paid by reason of the insureds death. THERE ARE a few exceptions to the rule, the primary being when the policy has been transferred for a valuable consideration; when the proceeds are received from a qualified pension or profit sharing plan, or a tax sheltered program (where the premiums were not subject to income tax); where the AMma than your nearest IFA Store. Check these advantages: o One location... feed for all animals Horses - Cows - Sheep - Poultry -Hogs HORSES cows are received as an alimony to a divorced wife; where there is no insurable interest in the life of the settlement options, they may exclude from their gross income up WOULD LIKE A LOCATION FOR HONEY BEES1 If you have some waste land, or crops that will benefit from bees, within 50 miles, contact Wendell Ransom 2994 East 3215 South, Salt Lake City, Utah 04109 Phone 485-001- 0. - Dogs - Cats - Chinchilla -- Beaver - Rabbits - Pigeons -- other birds o High Quality D In Bulk or Bags o Convenience... 21 stores o Confidence... you buy from people SHEEP with years of experience, who know HOGS livestock best. a We provide current feeding and health data on all livestock, gained through our membership in Cooperative DOGS CATS RABBITS insured. I WOULD ALSO like to point out that although the proceeds are received by the beneficiary income tax free, any earnings, such as interest, on the proceeds after they are received will be subject to income tax. Here again, however, when the proceeds are received by a husband or a wife under certain Mink CATTLE proceeds are received by a creditor from insurance on the life of a debtor; where the proceeds 7 Research Farms; o Our feed instruction booklets and pamphlets together with our experienced personnel help you get better results at less cost. BEAVER Buy IFA FEEDS MINK PIGEONS where you get these benefits and where the price is right INTERMOUNTAIN FARMERS STORES Spanish Fork Blaine Loveless 'Cannery Road 798-741- Soda Springs, Idaho Darrell Passey Homer E. Marble 241 So. 3rd W. 257-541- |