Tax Facts

114 / If a taxpayer gives a spouse a life insurance policy, is the taxpayer entitled to a gift tax marital deduction?

Yes.

An outright gift of a life insurance policy to the donor’s spouse qualifies for the gift tax marital deduction on the same basis as the gift of a bond or any other similar property.1 The same should hold for subsequent premiums paid on the policy by the donor. An annual exclusion may be allowed instead of the marital deduction if the donee spouse is not a U.S. citizen. See Q 157 for gift of policy in trust.

1.     Kidd v. Patterson, 230 F. Supp. 769 (N.D. Ala. 1964).

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