How do I calculate estate & inheritance taxes for a life policy?

I am putting a client in a $4Mil life insurance policy and its my first one. Do you know how I can calulate his estate and inheritance taxes? He owns about $1.5 Mill in real estate. Thank you.

Public Comments

1. If this is the US, you are using a crystal ball. The tax rules are likely to change by next year. The life insurance will be added to the estate and then the estate rules applied.
2. It is my understanding that if the proceeds of a life insurance policy go directly to the beneficiary, then there is no Estate Tax since the proceeds are not part of the estate. There is also no Income Tax on the proceeds of an insurance policy. There would only be Estate Tax if the proceeds of the policy were paid directly into the estate thus becoming part of the estate's value. Only if the estate were valued at over $3.5 million in 2009 would there be an Estate Tax paid by the estate before the estate is disbursed. As to Inheritance Tax, each state is different and Inheritance Taxes are paid by the recipient of the Inheritance. Some states, like California, have no Inheritance Tax, while other states, like New Jersey do. However, I do not know if life insurance proceeds are considered "inheritance" per se since they do not pass through the estate if they are paid directly to the beneficiary.