Tax Facts

150 / What income is taxable to a life insurance trust?

Generally, a life insurance trust is taxed on: (1) income that, under the terms of the trust, is accumulated for future distribution to someone other than the grantor, and (2) income that the trustee has discretion to accumulate or distribute, but that is not paid or credited to a beneficiary in the taxable year.1

1. IRC § 641; Treas. Reg. § 1.641(a)-2.

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