112 / Is the deduction under IRC Section 2053(a)(3) considered a claim against the insured’s estate?

The IRS has held that the availability of the deduction under IRC Section 2053(a)(3) depends upon the nature of the insured’s legal obligation under the divorce decree. If the insured’s obligation was simply to keep the policy in full force and effect with all premiums paid as long as the former spouse lived and remained unmarried, and the insured did that, then no obligation survived the insured’s death and the insured’s estate would not be entitled to a deduction. If, on the other hand, the divorce decree provided for the payment to the decedent’s former spouse of a specific sum of money upon the decedent’s death, and the decedent provided the funds by the purchase of life insurance, then the payment of the required amount would be a personal obligation of the decedent, so it would be payable from the decedent’s estate if the insurer was unable to meet its obligation. Under these circumstances, any proceeds payable to the former spouse to discharge the decedent’s obligation would be deductible under IRC Section 2053(a)(3).¹

---

1. Rev. Rul. 76-113, 1976-1 CB 276.