Life settlements often carry tax implications. While Habersham Funding, LLC does
not offer tax advice, the following information is generally understood as the tax
implications of a life settlement. Speak with your legal and financial advisors
for a thorough analysis before making any life settlement decision.
Not Taxable The amount of the settlement that
equals your cost basis (the aggregate amount of premiums you have paid into the
policy) is not taxable.
Ordinary Income The amount in excess of your
cost basis up to the cash surrender value (the amount you would receive from your
insurance company if you were to surrender your policy) is taxed as ordinary income.
Capital Gain The amount of life settlement
greater than the cash surrender value is taxed as capital gain