aristotle wrote:

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First issue--under the estate tax law as it exists today, a spouse
would pay no estate tax at the death of this individual anyway.

Second, such a policy, to keep from simply adding to the problem,
would need to be owned by someone other than the child and the child
could possess no incidents of ownership, nor ever end up with any.

Normally that would be handled with an irrevocable life insurance
trust. However, for a six year old that raises a whole host of
questions--including not having any clue whatsoever about just what
this person's wishes might be at his/her death or who should be the
beneficiary of the proceeds and how you plan to fund this policy.
Note that you can't *require* the proceeds to be used to pay estate
taxes or the policy comes back into the estate (and will raise the
tax even more).

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At this point, given the extreme uncertainty about the estate tax
ten years down the line (when you seem to think this inheritance
will occur), I don't know there's anything reasonable to do in terms
of estate planning for a six year old. Rather, it may rather be
much more important for planning to be done for the individual who
seems to have agreed to die on schedule ten years from now. Heck,
if the person is that agreeable, maybe we can get him/her to move up
the death a few years to the one year window where there will be no
estate tax...<grin> .

--
Ed Zollars, CPA
Phoenix, Arizona

I doubt very seriously that a "16 year old" will inherit ANYTHING ! ! !

In all probability, that 16 yr old will be eligible for the inheritance,
which will be HELD in some legal device, until that CHILD becomes a MAJOR. I
am unaware of any State that would consider a 16 yr old as a MAJOR.

In any event, the only way that a Life Insurance policy could be used to pay
ANY Tax, would be for the Insured to DIE. If and when that person inherits
that 5 Million $'s, the premium for a Life Insurance policy will NOT have
increased significantly.
Cal Lester CLU


"aristotle" <aristotle65[at]hotmail.com> wrote in message
news:5cb78c2d.0406261625.6e9cf9f6[at]posting.google.com...
- quote -

The policy on the 6 year old doesn't make sense for paying the taxes.

However given the source of the money, life insurance on the donor would
make sense, probably using a irrevocable life insurance trust.

"aristotle" <aristotle65[at]hotmail.com> wrote in message
news:5cb78c2d.0406261625.6e9cf9f6[at]posting.google.com...
- quote -

A 6 year old will inherit 5 million dollars in ten years. Is it wise
to purchase a large life insurance now that could be used to pay his
spouse and or family's future taxes. I raise this issue because a
multi million dollar policy is so inexpensive today for a 6 year old.
What other tact might be considered for future generations.