Managing Federal Taxes on Life Insurance Proceeds
“There are various strategies to protect an inheritance from taxes. What is the best option to minimize the risk of being taxed on life insurance payouts?
The IRS does not tax life insurance proceeds and inherited assets. However, some states, such as Kentucky, Pennsylvania and Nebraska, have an inheritance tax. Unfortunately, there isn’t much someone can do to avoid this tax except to move to a new state. However, having a tax and financial advisor can help a taxpayer plan so that there are no tax surprises and the tax is minimized.”