Estate Transfer

Updated: 09 June 2023

What Does Estate Transfer Mean?

An estate transfer is the conveyance of all the valuable possessions of an individual, such as property, investments, and life insurance, to their heirs. In terms of life insurance, the policy can be transferred as part of the estate in order to avoid an estate tax on the death benefit.

Insuranceopedia Explains Estate Transfer

There are generally four methods of executing an estate transfer, and the most common is a will (probable asset). The other three methods of transfer include non-probable assets, gifting of assets, and family trusts. However, all the other three methods must be carried out in conjunction with a written will. An estate plan without a will is considered to be intestate, which means that heirs of the decedent will be left out of the estate distribution.

Life insurance forms a considerable part of the decedent’s estate plan, which is not subject to estate tax. It can be transferred to the heirs as a trust or gift; otherwise, ownership is transferred to the beneficiary before the death of the insured. However, life insurance tax is subject to tax in the following situations: proceeds of the policy being paid to the executor of the decedent’s assets, the decedent still owns the policy upon death, ownership of the policy is transferred within three years of death, or in case the spouse is a beneficiary and also dies after receiving the payout from the policy.

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