Taxation on proceeds is best spoken about with your tax advisor. Selling such an asset will also have an effect on your estate planning and portfolio management. Many factors come into play including the policy owner's tax bracket. In taxing a life settlement, typically the difference between the settlement amount and the policy cost basis is treated as a capital gain.
Estate planning and portfolio management will be affected by a life settlement. Consult your account to determine your taxable income as it pertains to the proceeds you are receiving. And make sure all your other taxation questions are answered before proceeding with such a monumental move.
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