Hi --

My siblings and I are co-owners (with our father) in a now-defunct company. The company holds some real-estate, but the main assets are three large life insurance policies (against our father and his two previous co-shareholders). The policies were originally held to fund Buy-Sell redemption agreements with the owners ... but they are no longer needed for that.

So, my question: can the the beneficiaries on the policies be changed to my siblings and I so that the death benefits on our father/old-co-owners are paid directly to us tax-free?

At first, we were simply pleased to learn that insurance death benefits would go to the company tax-free ... but then we figured, why put ourselves in a position of paying a dividend tax (whenever we would want to take cash out of the company) if we could simply make ourselves the direct beneficiares?

I will of course check with my corporate/tax attorney ... but I wanted to see if this was at all feasible or what to check on first.

FWIW, the company is in Massachusetts.

Thanks.

Hello,

I am not a tax attorney and so I can not render tax advice. Be sure to consult with your tax advisor on this matter.

Having said that, the owner of a life insurance policy can change the beneficiary. If a corporation is the owner, then an officer would sign the authorization form.

__________________
As an independent life insurance broker, I will gladly answer your consumer questions about life insurance. Please contact me by email (skobrin@stevenkobrin.com) or by toll-free telephone (1-866-633-1818). Thank you.