Is There Federal Tax On Life Insurance? 
There can be federal estate tax exposure on life insurance death benefit proceeds . To avoid federal estate tax exposure , many estate attorneys recommend using an irrevocable life insurance trust to own the life entrance policy , which in effect then is deemed as being out of the estate . Some estate planning strategies use other family members as the policy owner to accomplish removing the future death benefit proceeds outside the estate . Consult your estate planning attorney before moving forward with any ownership changes or assigning ownership to a life insurance policy . 