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A query was raised regarding whether the surplus from a funeral insurance policy, after covering funeral expenses, qualifies for the life insurance tax reduction. The Directorate General for Taxes (DGT) ruled that it does not, as funeral insurance is a distinct legal entity and the remaining funds form part of the deceased's estate.
This ruling clarifies that any surplus funds from funeral insurance policies will be subject to inheritance tax without the specific exemptions applied to life insurance policies, as these funds are considered part of the estate.
The tax team reviews your specific situation.
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