When Are Life Insurance Proceeds Included In An Estate? 
Generally speaking , life insurance proceeds paid to the last survivor of a marriage can be includable in the estate . But if the total estate , including life insurance proceeds , falls under the federal unified credit , there may be no impact . Keep in mind that at the state level the exemption amounts are generally much lower , so there could be tax exposure . To avoid this possibility an irrevocable life insurance trust can own the life insurance policy and insulate the proceeds from federal and state estate taxes and distribute them to the trust beneficiaries . 