Charles,age 65,owns a paid-up $250,000 whole life policy on his own life.Charles is doing some estate planning and would not like this policy to be included in his gross estate for federal estate tax purposes.Which of the following statements is (are)true regarding the tax treatment of this policy?
I.Charles can avoid having the policy proceeds included in his gross estate by naming his estate the beneficiary.
II.If Charles makes an absolute assignment of the policy and dies more than three years later,the policy is not counted as part of his gross estate.

Question

Quizplus · Accepted Answer

Statement I is incorrect because naming the estate as beneficiary would result in the policy proceeds being included in the gross estate. Statement II is correct because if Charles makes an absolute assignment of the policy and dies more than three years later, the policy is not included in his gross estate for federal estate tax purposes.

Charles,age 65,owns a Paid-Up $250,000 Whole Life Policy on His