Are life insurance proceeds payable under a policy on a qualified participant’s life includible in such participant’s gross estate?

Life insurance proceeds from a qualified plan that are payable to the deceased participant’s executor (or estate) are includible in the deceased participant’s gross estate. [IRC §2042(1)] If the proceeds are payable to a beneficiary, they are included in the deceased participant’s gross estate only if the decedent possessed incidents of ownership in the policy at his or her death. [IRC §2042(2)] Incidents of ownership include the power to change the beneficiary, to surrender or cancel the policy, to assign the policy, to revoke an assignment, to pledge the policy for a loan, or to obtain from the insurer a loan against the surrender value of the policy. [Reg. §1.2042-1(c) (2)]


REFERENCE: Estate and Retirement Planning Answer Book by William D. Mitchell ©2013 Wolters Kluwer. All rights reserved


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