222 / Does the outright gift of a life insurance policy qualify for the gift tax annual exclusion, even if the gift is to a minor?
Yes.
The exclusion can be applied against the value of the policy at the time of the gift and to subsequent premium payments.1 An outright gift of a policy to a minor qualifies for the exclusion even though a guardian is not appointed.2 A gift of life insurance under a Uniform Gifts to Minors Act or a Uniform Transfers to Minors Act generally qualifies for the gift tax annual exclusion. All but a few states have modified the Uniform Act to include gifts of life insurance. Any transfer of property to a minor under statutes patterned after either the model act or the uniform act constitutes a complete gift for federal gift tax purposes to the extent of the full fair market value of the property transferred. Such a gift generally qualifies for the gift tax annual exclusion authorized by IRC Section 2503(b).3 If the subject of the gift is life insurance, its “full fair market value” would presumably be established by the same rules applicable to gifts of life insurance generally ( Q 119).
1. IRC § 2503(b); Treas. Reg. §§ 25.2503-3(c)(Ex. 6), 25.2511-1(a), 25.2511-1(g).