I recently blogged about Whitney’s dispute with her step-mother over her father’s life insurance policy. Whitney won that dispute, but passed away before she could enjoy the victory. Life insurance proceeds are not always free of income tax and estate tax. If you properly set it up however, you can avoid having the insurance proceeds subject to both of these taxes. You probably need professional help to set this strategy up and some kinds of insurance don’t qualify. While the rules to set up these tax benefits are concrete, the rest of Whitney Houston’s estate is not, and the resolution of this confusion is likely to teach us many more tax and estate planning lessons.
See Robert W. Wood, Whitney Houston’s Death and Taxes, Forbes, Feb. 13, 2012.
Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.
