Tax Facts

170 / How is community property life insurance taxed when the spouse who is not the insured dies first?

One-half of the value of the unmatured policy is includable in the non-insured spouse’s gross estate.1 The value of the policy is determined under Treasury Regulation Section 20.2031-8 ( Q 200).2 The amount includable in the estate of the surviving insured spouse upon his or her subsequent death is determined by applying state law to the facts presented to ascertain the extent to which the proceeds are treated as community property or as separate property of the insured.3




1.     U.S. v. Stewart (Cal.) 270 F.2d 894 (9th Cir. 1959); California Trust Co. v. Riddell 136 F. Supp. 7 (S.D. Cal. 1955); Rev. Rul. 74-284.

2.     Rev. Rul. 75-100, 75-1 CB 303.

3.     See Estate of Cervin v. Commissioner, 111 F.3d 1252, 97-1 USTC ¶ 60,274 (5th Cir. 1997), rev’g TC Memo 1994-550; Estate of Cavenaugh v. Commissioner (Tex.), 51 F.3d 597, 95-1 USTC ¶ 60,195 (5th Cir. 1995), rev’g in part 100 TC 407 (1993); Scott v. Commissioner (Cal.) 374 F.2d 154 (9th Cir. 1967); Rev. Rul. 75-100, supra.


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