Court Opinion

ID: 6759465
Source: CourtListenerOpinion
Date Created: 2022-07-21 00:30:05.871893+00
Date Added: 2024-06-11T16:02:33.266723
License: Public Domain

Wright, J.,
dissenting. Over two generations ago the life insurance industry devised a policy; commonly known as “key man” insurance, to insure small businesses against the untimely death of one or more of the principals. This form of insurance coverage is generally used to protect a company from pecuniary loss resulting from the death of one of its principals or to provide funds to purchase the decedent’s interest in the company from his estate.
Many states such as Ohio have enacted a specific exemption from estate taxes for insurance proceeds. R.C. 5731.12(A) states in unequivocal terms that “[t]he value of the gross estate shall not include any amount receivable as insurance under policies on .the life of the decedent by beneficiaries other than the decedent’s estate * * *.” The plain meaning of the language of the statute could not be more clear in its thrust. In this case, the proceeds were received by beneficiaries other than the decedent’s estate, namely: an agency and an automobile dealership. The proceeds, therefore, are not taxable under R.G. 5731.12(A). Further, decedent did *360not purchase the policies of life insurance nor did he hold any indicia of ownership with respect to the policies.3
In my view, the plain and simple meaning of the words of this statute precludes the interpretation urged by the majority. The majority permits the Tax Commissioner to accomplish indirectly what the statute prohibits directly. The majority holds that the commissioner is not taxing the proceeds of the insurance policies, but rather the increased value of the shares of corporate stock owned by the decedent and included in his estate. The majority, through its expansive interpretation of R.C. 5731.12(A), sanctions a confiscatory version of the statute. I cannot endorse this attack on a taxpayer through a grossly erroneous interpretation of the Tax Code.
Accordingly, I respectfully dissent.
Holmes and Douglas, JJ., concur in the foregoing dissenting opinion.

 The proceeds from key man insurance are exempt from taxation by the federal government under the Internal Revenue Code. Section 2042, Title 26, U.S. Code. These proceeds are not taxable to the estate of the decedent absent substantial indicia of ownership by the decedent such as the retention of the right to change'ihe beneficiary of the policy, the ownership of the policy, or the ability to procure a loan against the policy's cash value. See, e.g., First Natl. Bank of Midland v. United States (C.A. 5, 1970), 423 F. 2d 1286.