Incidents Of Ownership

Any interests or rights that an individual maintains in an asset, including property and insurance, that allow the person to change, modify, use or benefit from that asset. This is important for determining estate taxes. An individual can reduce the size of his or her estate by gifting assets to beneficiaries but, to avoid estate tax on the gift, the original owner must not retain any incidents of ownership in the gifted assets.

Investopedia Says:
In insurance, incidents of ownership exist on a policy if an individual has the right to change the beneficiary, transfer ownership of the policy, use the policy value as collateral for a loan, or any other traditional rights of ownership. In terms of property, if an individual has the right to possess or use that asset, or if he or she benefits in any other way from the property, this would be considered an incident of ownership.

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An element of ownership or degree of control. For example, if a Grantor retains control of property transferred to an individual or trust, the property will be included in the grantor's Gross Estate for Estate Tax purposes.

Policyowner rights under a life insurance policy, including the right to name a new beneficiary at any time and to surrender the policy for its cash value.

Some aspect of the exclusive possession or control over the disposition or use of property that demonstrates that the person with such exclusive rights has not relinquished them.

A person who has kept the right to change the beneficiaries on his or her life insurance policy has retained an incident of ownership and is, therefore, considered the owner of the policy.