Insurance
Life Insurance
Estates

If a person is named the beneficiary of a policy does the amount become part of the estate even though the beneficiary has the entire tax burden?

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2015-07-15 19:03:29
2015-07-15 19:03:29

The proceeds are includable in insured's gross estate if the insured legally possessed and could legally exercise any incidents of ownership at the time of his death. It does not matter that decedent did not have possession of the policy and therefore was unable to exercise his ownership rights at the time of his death (Comm. v. Est. of Noel, 380 U.S. 678 (1965)),

The beneficiary however does NOT pay Income Tax on the proceeds IRC Sec. 101(a)(1).

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