Is Life Insurance Included In Estate Tax? 
Life insurance is paid directly to the benefactresses of the life insurance policy . Generally most married couples use the marital deduction act to pass the proceeds and all other assets to the surviving spouse . If the proceeds remain with the surviving spouse , they are subject to federal and state estate taxation if the proceeds and all other assets exceed the federal unified credit and the state exemptions . If that possibility exists , then the policy or policies should be owned day one by an Irrecoverable Life Insurance Trust to avoid inclusion in the estate . 