Death And Taxes

ONE RARELY RECEIVES, OR EXPECTS, COMPASSION from the Internal Revenue Service. But when it comes to the terminally ill, especially those suffering from AIDS, the IRS is showing that it may have a heart after all. The agency has issued proposed regulations on ways insurance companies can provide accelerated death benefits to policyholders, tax free. Accelerated death benefits are in growing demand as AIDS patients seek to cash in their life-insurance policies, either to pay for treatments or to fulfill dying wishes. With health costs skyrocketing, accelerated death benefits are also a desired option for other terminally ill patients. Insurance companies had been operating without clear guidance about the tax status of such payments. Both the insurance industry and AIDS groups are praising the new proposals as an important step toward clearing up the situation. The IRS hopes to put the new rules in place by the middle of next year; hearings on the issue are set for March.