Question

Fred is a U.S. citizen. His wife, Christina, is a in the US on a K1 Visa. Fred died in 2019.

At the time of his death, he owned a life insurance policy on his life. It had a death benefit of $500,000 and cash value of $200,000. Christina is the beneficiary.

What amount, if any, from this policy will included in Fred's gross estate?

What amount, if any, will qualify for the unlimited marital deduction? Why?

Answer 1

1)section 2042 of the Internal Revenue Code states that the value of life insurance proceeds insuring your life are included in your gross estate if the proceeds are payable: (1) to your estate, either directly or indirectly or (2) to named beneficiaries if you possessed any incidents of ownership in the policy at the time of your death.

So yes cash money as well as life insurance death benifit money will be inculded in fred's gross estate

So Fred's gross estate =$500000 +$200000=$700000

2)The unlimited marital deduction is a provision in the U.S. Federal Estate and Gift Tax Law that allows an individual to transfer an unrestricted amount of assets to his or her spouse at any time, including at the death of the transferor, free from tax. The unlimited marital deduction is considered an estate preservation tool because assets can be distributed to surviving spouses without incurring estate or gift tax liabilities.

So cash will not be inculded in unlimited maritial deduction

So only amount of dealth benifite from life insurance policy of amount $ 500000 will be consider as a UNLIMITED MARTIAL DEDUCTION...

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From Mona....