Irrevocable Life insurance Trusts
Irrevocable Life insurance Trusts – In a recent decision by the court of appeals, a life insurance policy owned by a US trust on the life of a US resident whose beneficiary was a French fiscal resident was ruled to be an indirect gift. Because the trust – not the insured – owned the policies, the court treated the payout as a gift, not life-insurance.
If the trust owns the policy, and the insured funded the trust, and the trust is irrevocable, and beneficiaries receive proceeds from the trust, then France will treat the payout as a donation (gift tax).