Question 6 In 2017, Lori assigned a paid-up whole life insurance policy to an Irrevocable Life...

Question 6 In 2017, Lori assigned a paid-up whole life insurance policy to an Irrevocable Life Insurance Trust (ILIT) for the benefit of her three children. The ILIT contained a Crummey provision for the benefit of each child. At the time of the transfer, the whole life insurance policy was valued at $200,000, and since Lori had not made any other taxable gifts during her lifetime, she did not owe any gift tax. Lori died in 2018, and the face value of the whole life insurance policy of $2,000,000 was paid to the ILIT. Regarding this transfer, how much is included in Lori’s gross estate at her death?

A. $0.

B. $164,000.

C. $964,000.

D. $2,000,000.

Expert Solution

Ans D. $2,000,000.

The death benefit of life insurance transferred within 3 years of the decendent's date of death is included in his/her gross estate. In above case the policy is transferred 1 year before the death of Lori. So, full $ 2,000,000 is included in her gross estate.

jeff jeffy answered 2 years ago

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