Tax Facts

154 / Is there a gift for gift tax purposes when a grantor transfers a life insurance policy to an irrevocable trust in which the grantor has no interest?

Yes.1 The value of the gift will be the fair market value of the policy as of the date of the transfer ( Q 119). There is no gift if the trust is revocable.2 An employee’s assignment of a group life policy to an irrevocable trust was held not to be a taxable gift because the policy had no ascertainable value ( Q 119, Q 159, Q 212).3

1.     Treas. Reg. § 25.2511-1(h)(8).

2.     Treas. Reg. § 25.2511-2(c).

3.     Rev. Rul. 76-490, 1976-2 CB 300.

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