Does a Personal Guaranty constitute an “incident of ownership” under Internal Revenue Code Sec. 2042?
Neither CWS nor UNF provides tax or legal advice. Please consult with your legal or tax advisor to discuss the information discussed herein. Inherent in the use of life insurance in estate planning is the estate tax implications. Is the value of the life insurance includable in the decedent’s estate? Internal Revenue Code (IRC) 2042 states that without the decedent having any incidents of ownership, the proceeds of this policy may not be includable in the estate. Consequently, it is very important to understand the term “incidents of ownership.” The term “incidents of ownership” encompasses far more than legal title to a policy. Generally speaking, the term refers to the right of the insured or his estate to the economic benefits of the policy. A decedent would be considered to have an incident of ownership in an insurance policy on his life if that policy is held in trust and under the terms of the trust, the decedent had the power (as trustee or otherwise) to change the beneficiary,
Related Questions
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- Does a Personal Guaranty constitute an "incident of ownership" under Internal Revenue Code Sec. 2042?
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