A taxpayer must not retain any incidents of ownership in a life insurance policy on his or her life to have it excluded from his or her taxable estate.

Question

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For a life insurance policy on the taxpayer's life to be excluded from their taxable estate, the taxpayer must not retain any incidents of ownership in the policy. Incidents of ownership refer to rights like the ability to change beneficiaries, borrow against the policy, or cancel it, which, if retained, would cause the policy proceeds to be included in the taxable estate.

A Taxpayer Must Not Retain Any Incidents of Ownership in a Life